Power And Dollar

Implications of 2008 Election on Health Insurance Industry and Big Pharm

What arre the implications of this presidential election on health insurance industry and big pharms?

 

CNN says McCain has the best healthcare plan:

http://money.cnn.com/2008/03/10/news/economy/tully_healthcare.fortune/

 

CNN here explains why

1)      Wall Street industries watchers are not paying attention to this election;

2)      Big Pharm companies are donating large amounts to both Obama and Clinton.

http://money.cnn.com/2008/03/04/news/companies/pharma_votes/index.htm?postversion=2008030714

 

Let’s reiterate the point that the 3 proposals (the first link) are actually similar. 

 

Why are the big pharm donating $$ to the democrats.  It is actually more than their expectation that Democrats are going win (and therefore they want access).  If a Democrat Whitehouse implements the healthcare policy, then drugs will be cheap.  The manufacturer with the lowest cost gets the highest return and a lot less to do with marketing, distribution etc.  This may have impact on the product development side of this business.  Now, what shape will this universal healthcare be like?  If it were very much the Canadian style, then the government (state or federal) could be the decision maker for which drug to be distributed. 

 

And this is a big reason (or even incentive) for the donation.

 

What will happen in this scenario?  There will be M&A in this case, and the acquirer will be the one who secures the government contracts.  Shareholders may not get the best deal out of this since the prices are at least quasi regulated by the government (the first CNN link).  The greatest beneficiaries will be the executives of the acquiring Pharms.  And so, some employees of the big Pharms are really into donations to the Democrats.  Product development spending may go down (R&D people need to watch out). 

 

This could also be the most nightmarish scenario for the health insurance industry.  Their market would be much smaller.  They will not be able to do market segmentation either.  There will be probably no product differentiation. 

 

Why isn’t Wall Street concerned, as mentioned in the CNN article?  They believe that is too much change to accomplish.  This kind of change, they think, is fundamental to the society and thus requires a huge political will, political capital. 

 

Health care is different from telephone, electricity or gas in the sense that it does not require hardware infrastructure.  The infrastructure pretty much requires a monopoly.  Healthcare does not. 

 

Do Americans have the will to have a government beau racy to run healthcare?  If democrats are able to debate more on the merit of their 2 different proposals, then American voters will be educated to make up their mind.  However they continue to focus on perceptions of candidates.  Let’s hope that this will be a hot topic between McCain and the future Democratic candidate.

 

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March 12, 2008 - Posted by | america politics, clinton, Current Affairs, economics, election, Hillary Clinton, mccain, obama, opinion, politics, US politics

2 Comments »

  1. »»HILLARY FOR PRESIDENTIST.««
    *
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    »»:««
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    Gustav Staedtler.
    *
    THEY CALL IT
    POLITICS, RIGHT, RELIGION, ART AND CULTURE
    TO LEAD THE PEOPLE INTO THE TOTAL RUIN.
    »»»»»»»»»»»»»»:««««««««««««««
    !!!. – WITHOUT TRUTH YOU ARE THE LOSER – FOREVER – .!!!
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    »»»»»»»»»:«««««««««

    US-MADMAM
    HILLARY
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    In Indien erkauft der Politiker bei den Armen seine Stimmen mit einer warmen Suppe.
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    WAS IST DEMOKRATIE.?
    *
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    Politik macht,
    denn wozu arbeiten,
    wenn man Politiker werden kann.?
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    Comment by gustavstaedtler | March 12, 2008 | Reply

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