The pharmaceutical industry has headed off the threat of more onerous imposed cost savings by stepping up to the plate on healthcare reform in the all-important U.S. market.
A weekend deal, announced by President Barack Obama, offering some $80 billion in prescription discounts over 10 years to help elderly Americans afford drugs will crimp profits, but the figure is a less than initially feared.
"Negotiations began with government asking for $130 billion, so $80 billion would represent a relatively benign outcome," said Savvas Neophytou, an analyst at Panmure Gordon. What's more, the plan agreed with Senate Finance Committee Chairman Max Baucus, with the backing of the Obama administration, means concessions will be funnelled in an area that could generate additional sales volume.
Drugmakers have agreed to provide a 50 percent discount for those elderly and disabled Americans in the Medicare health insurance program who face a gap in coverage after their drug costs reach a certain level, known as the "doughnut hole".
"Roughly 20-25 percent of Medicare D patients reach the doughnut hole, and the majority of them either stop or switch their medications," Deutsche Bank analyst Barbara Ryan said in a research note.
"Therefore, pharma may be providing discounts for branded drugs which will primarily represent incremental demand."
guardian.co.uk
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