Election’s Over, Time to Move On
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?Drug companies will do just fine long term.? |
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After two years of campaigning, we have status quo in our government mix. Not much has changed from November 5th. That does not mean the election does not have major implications for the drug industry. Despite being the law of the land, the Affordable Care Act (ACA) was thought to be phantom law by many. The promise to gut it by Romney made it seem like a temporary law.
Now that the ACA will be implemented fully, we must expect significant changes to the drug business. Despite the $80 billion deal cut by big pharma and the Obama team, I do not expect drug companies to see the end to government monetary demands. We cannot afford the ACA as passed because it does very little to reduce cost. Once the reality hits in terms of the actual bill, we can expect the ?profit hungry? drug industry to be a renewed target of price cut demands. Will that mean the Obama team has reneged on the deal? They will say that the drug industry needs to pay its fair share of the health bill and if that sounds like a familiar tactic, it seems to be politically useful. Fair share will be upped from the $80 billion already agreed on.
That means drug companies will need to find new ways to make their profits. That could mean more cost cuts, more consolidation, less risky R&D, and more outsourcing. Marketers may be faced with less to spend.
On the positive side of the ACA, we will see more Americans with insurance. They will have more access to drugs and prevention of disease will be a big shift in emphasis. Drug makers will see their products used earlier in the disease process. They might be at lower prices, however, so they might not increase their revenue. The ACA will offer marketers wonderful opportunities to push early diagnosis and treatment. So many of the newly insured will be minorities, and I expect multicultural marketing will boom.
Drug companies will do just fine long term. As long as government stays reasonable and does not institute price controls we should see a vibrant diversified drug industry offering entrepreneurs huge opportunities. The digital and genomics companies are ready to unleash their innovation on the healthcare industry.
I strongly believe that no American should go bankrupt because of unexpected major health costs. I also believe that people with pre-existing conditions need help affording treatment. That being said, we all pay for that. Insurance companies forced to accept sick people will bill all of us for the added cost. The ACA mandates sound great but we all pay for those extra benefits.
I hope that we end all this political talking point nonsense for at least a couple of years. The ACA is neither a disaster nor panacea. It will take the best minds in healthcare to figure out how to make it work. No matter what, Americans will not get the same generous Medicare coverage they have now. Changes may affect current and near retirees and certainly will impact the younger age groups. We also will face a health provider shortage which will lead to reassessment of who treats patients. I expect more emphasis on physician assistants and nurses as providers.
Although I am a Republican, I never saw this election as a critical choice in the direction of America. Both candidates want to do what is best and they differ in how we get there. Pragmatic policy making is what is needed, not what appeals to Rachel Maddow or Rush Limbaugh. Most Americans are moderates and it time our politicians all moved to the center. I expect our President will do the same.
Bob Ehrlich, Chairman
DTC Perspectives, Inc.
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