by Marc Lichtenfeld, Senior Analyst, Smart Profits Report
It’s bold. It’s ambitious. And if it works, it should make America a healthier nation.
Reform plans are a dime a dozen in Washington - many of which get stuck in political gridlock without ever reaching a satisfactory resolution.
And healthcare reform is no different, with multiple presidents trying - and failing - to pass a plan that would see every American covered by healthcare insurance.
The Obama administration is the latest to step up to the plate and take a swing. And with Congress currently chewing over the details of its plan, it has healthcare investors shaking in the knees, wondering how an overhaul of the system will impact biotech, pharma, medical devices, insurers and other medical stocks.
Are their fears rational? And what are the best stocks to play? I’ve got three for you…
An American Healthcare Utopia
Imagine a world where poor Americans no longer have to ration their medication. A world where parents don’t have to worry about how to pay for their sick child’s medical bills. A world where preventative and educational programs will hopefully keep people from getting ill in the first place.
Great aims, of course.
But what does it mean for the biotech sector?
Investors worried about how an insurance revamp will affect biotechs should know that the impact will be limited. Insurance already covers most high-priced biotech drugs.
In addition, many companies have programs in place to help patients who can’t afford the medicine.
In fact, if everyone has healthcare insurance, biotech companies could theoretically even see a bump up in revenue, as those patients previously receiving assistance would now be covered.
There is another provision, however that has the potential to roil biotech stocks…
The Waxman Way
Representative Henry Waxman (D-California) wants to see lower prices for high-priced biotech drugs.
As you may know, some biotech drugs can be exorbitantly expensive. For example, it’s not uncommon for cancer therapies to cost in the tens of thousands of dollars for a full cycle of treatment. And drugs that treat rare diseases can costs six figures per year.
To combat this, Waxman wants to see…
~ The introduction of generic biologics in the marketplace. But he wants it quicker than is possible right now.
~ The allowance of generic drugs onto the market after five years. Industry trade groups, on the other hand, want to see biotech patent exclusivity for at least 12 years.
