Pharmaceuticals - Political pressure

Financial Times  Jul 22  Comment 
The European Commission will take a decision on what to do in September, but meanwhile political pressure is mounting in Europe
Forbes  Jul 14  Comment 
Despite mounting political pressure in the U.S., drug maker AbbVie appears on the verge of convincing Dublin-based Shire PLC to consider a sweetened offer of nearly $54 billion for the Irish pharmaceutical company.  Jul 9  Comment 
City grandee will consider lessons from the £3.3bn privatisation, as MPs prepare to publish report critical of Vince Cable The government has bowed to mounting political pressure and announced a review of how it handles privatisations following...
Wall Street Journal  Jul 2  Comment 
European Union antitrust authorities approved Telefónica SA's $11.7 billion takeover of German mobile operator after a lengthy review marked by political pressure and an unprecedented revolt by national regulators.
Forbes  Jun 24  Comment 
Walgreen Co. (WAG), closing in on key deadlines in its three-year plan to acquire European drugstore giant Alliance Boots, said an inversion remains on the table that would relocate the iconic brand from the U.S. to take advantage of a loophole...
Financial Times  Jun 17  Comment 
Fiscal Advisory Council says Dublin must make extra €2bn in savings in spite of political pressure to end years of tax rises and budget cuts  Jun 2  Comment 
Liquidators for consumers left out of pocket say they have new evidence that means £6m settlement accepted was inadequate ScottishPower is facing fresh legal and political pressure over one of Britain's biggest extended-warranty scandals, which...
Reuters  May 20  Comment 
Goldman Sachs has begun a formal process to sell the metals warehousing business it purchased four years ago, a spokesman said on Tuesday, disclosing the first definitive effort to shed the operation amid regulatory and political pressure.
Financial Times  May 9  Comment 
The Russian president has many cards in his favour but his options are limited, especially with domestic political pressure not to step back
Forbes  May 9  Comment 
There's a widespread misconception among policy wonks that Washington is too generous with the nation's warfighters.  Actually, that's only half true.  The political system is responsive to warfighter needs when there's an electoral benefit to...


Prescription drug prices are often brought up in debates about the U.S. health care system as a whole. Many claim that pharmaceutical companies overcharge for their prescription drugs, making quality healthcare too expensive for some to afford. Drug companies cite the high costs of drug development as the reason for high end-user prices. They also often decry the length of patent protection, saying that they have to recoup all the money spent on development within a relatively limited period of time, forcing them to charge higher prices. Nonetheless, there is growing political pressure to lower prescription drug prices and relax the restrictions on generic drug production, despite pharmaceutical companies' warnings that this could slow or hinder the development of life-saving drugs.

An example of this political pressure is the recent bill passed by the House of Representatives aimed at lowering prescription drug costs for Medicare recipients. The bill repealed a previous provision that prevented the Secretary of Health and Human Services from negotiating with drug companies on behalf of Medicare recipients. Instead, the new bill requires that the Secretary conduct such price negotiations. This is aimed at lowering costs for Americans enrolled in Medicare prescription drug plans, though it would save the government money as well.

US Federal Reserve chairman Ben Bernanke warned of rising health costs and the effect it may have on the government budget. Lower income households would be the hardest hit because they depend the most on government help.[1]

Companies that benefit from increased regulation of pharmaceuticals

Health insurance companies

Companies hurt by increased regulation of pharmaceuticals

Pharmaceutical companies

The drug development process is costly and time-consuming, taking an average of $800 million and several years to develop just one commercially viable drug. Pharmaceutical companies cite these as reasons why they're forced to charge seemingly exorbitant prices for their products. If political pressure were to lead to increased regulation of drug prices or a relaxing of rules governing generics, large pharmaceutical companies would be negatively impacted.

Among the biggest issues facing the industry is the meaningful decline in the pace of new drug introductions combined with the pending patent expiration of some of the highest revenue producing drugs in the industry. Merck is likely to lose 25% of its revenue to patent expiration over the next 3 years, drugs like Vasotec, Prinivil, Pepsid, and Prilosec. Pfizer faces the patent expiration of Lipitor, it's $13 billion blockbuster, in 2011. Patented drugs are coming off patent faster than new drugs are being patented. This is steadily eroding the profitability of the industry as price per pill declines dramatically upon the introduction of generic competition, and operating margins move into the single digits. Firms are reacting with cuts in R&D and Sales Expenses, and are finding growth through acquisition and the economies of scale of size. The largest firms are moving toward a model that recognizes their core strength as distribution while innovation is purchased on the outside.

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