worried that the era of having a lick-spittle Congress, catering to every whim and lobbyist wet dream, might be over. Might be. There are plenty of corporate Democrats who would like a healthy donation from Big Pharma too.
Shift has drug firms wary Democrats' gains in Congress could bring pressure for increased regulation of prices
Tuesday's Democratic landslide in congressional elections raises the specter of federal regulation of drug prices via changes to Medicare's new prescription drug benefit--a move that could lower costs for seniors and squeeze pharmaceutical and health insurance industry profits.
With Democrats in control of the U.S. House of Representatives, some expect them to seek passage of price control measures in that legislative body. And even if Republicans retain a narrow majority in the U.S. Senate, there are enough Republicans who supported price control measures in the past that bills will gain momentum next year and members of Congress who vote against them will feel the wrath of seniors in 2008, analysts say.
Noting the coming pressure of a Democratic Congress, stocks fell across the board on Wednesday for drug companies, health insurers and pharmacy benefit firms.
Shares of drugmakers Abbott Laboratories, Johnson & Johnson and Pfizer Inc. fell between 1 and 2 percent.
Health insurers were hit harder. Humana Inc. shares dropped nearly 6 percent and shares of UnitedHealth Group were off 3.2 percent.
Democrats have said these firms have reaped huge sales and profits from the new drug benefit--money that could have been passed on to taxpayers in terms of savings or to seniors in the form of richer drug benefits.
The law creating the Medicare Part D drug benefit, added in 2003, did not allow the Medicare program to negotiate prices directly with manufacturers, as the U.S. Department of Veterans Affairs does. The VA is known for winning price concessions from drug companies through direct negotiations.
Not only were such direct negotiations favored by Democrats, but some influential Republican senators, such as presidential aspirant John McCain, supported the idea. McCain's could be a critical vote.
Not to be underestimated, however, is the clout of the pharmaceutical industry, which contributes heavily to campaigns of both parties.