Sprinting to the Finish
Could it really happen this time? The Obama Administration is pushing health care reform forward with tremendous force and alacrity, such that we may know in the next couple months whether one of the fundamental goals of the Obama presidency is achieved or not. Obama has said he wants a House version of a bill passed before Congress's August recess--a stunning pace for reform that has been over 70 years in the making. But that's the point: Obama doesn't want anyone to debate this too long, doesn't want negative lobbying and campaigns to gain momentum, doesn't want red state (and other) legislators to spend too long getting an earful from constituents during recess.
While history would suggest that Obama faces long odds in getting any sort of reform passed (think of large-scale failures in the Clinton, Nixon, Truman, Eisenhower, and Roosevelt administrations), Obama may be enjoying a historical alignment of the stars that hasn't happened since Medicare and Medicaid were created under the Johnson Administration in 1965. Part of that is circumstance--Democratic majorities in both houses of Congress, a high level of dissatisfaction with the status quo, and a period where trillions are already flowing out of taxpayers' pockets--but part of it is also strategy. Obama is willing to let Congress iron out the details as long as they meet some broad principles, a far cry from the we-know-what's-best executive fiat that marked the effort of the Clinton Administration.
Of course, current Congressional in-fighting doesn't bode all that well for a new bill, but Obama isn't giving up. At a recent press conference, he indicated willingness to even compromise on one of his pet demands, which was to have an optional public program. He clearly wants to just get something passed, knowing we can tinker with details later. And that's probably a smart path to success--it makes what sounds like an impossible goal actually have a shot at becoming reality.
What's quite surprising is that this feverish activity isn't translating into much volatility in healthcare stocks. It seems that investors either feel the positives and negatives largely balance out, or that Obama has bitten off too much and won't be successful in passing anything, or simply that they don't know what to expect.
Drug companies have been canny thus far, volunteering to lower prices to counter the "donut hole" of coverage in Medicare Part D and pledge other money for unspecified reform. It's a relatively pain-free way to look like their team players in reform (and it's contingent on passage of a larger reform package).
But bigger battles loom on the generics front. Big pharma opposes Obama's effort to halt "anti-competitive agreements" that delay the launch of generics. Biotech companies, meanwhile, are facing accelerated passage of a follow-on biologics bill as a rider to the larger package. The way it looks now, the bill could limit data exclusivity to seven years (more on that under Legal Briefs). That's certainly going to throw trade groups into a conniption, but other details of reform will likely end up making a bigger difference, for better or for worse.
And if health care reform doesn't pass this time? History suggests it'll be another 15 to 20 years before anyone else has the stomach to try again.
Read the BioPharm Executive online newsletter June 2009.
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More By Karl Thiel