Fri Nov 16, 2007 5:01pm EST
By Kim Dixon and Lisa Richwine
NEW YORK (Reuters) - While Republicans vying for the U.S. presidency warn about Democratic plans for a "government takeover of healthcare," many companies in the sector see opportunities should a Democrat win.
Supporting cheaper versions of pricey biologic drugs and helping Americans without health insurance are among the benefits cited by executives this week at the Reuters Health Summit in New York.
The spiraling cost of health care is often named the biggest domestic policy worry in national polls.
Democrats back more expansive measures to boost coverage of the 47 million Americans currently uninsured and support greater us of generic drugs to curb costs.
"What Democrats are very likely to support is a national approach to the uninsured," said David Snow, chief executive at Medco Health Solutions Inc (MHS.N: Quote, Profile, Research). "Net-net for Medco, it's a good thing."
Medco was spun off of drugmaker Merck & Co (MRK.N: Quote, Profile, Research) in 2003 and sells pharmacy services to employers and the government, reaching 60 million people. Demand for its services would likely grow if more people were insured. Rivals include CVS Caremark (CVS.N: Quote, Profile, Research) and Express Scripts (ESRX.O: Quote, Profile, Research)
Executives, including big drugmakers more wary of government involvement, say the pressure to hold down health costs means the government's role is likely to expand under either party.
"Ultimately, I don't think the American public wants to spend more than more than 16 percent of their GDP (gross domestic product) on healthcare," UK's Shire Plc (SHP.L: Quote, Profile, Research) chief executive Matthew Emmens said.
Health care costs were about 16 percent of GDP in 2005, according to government data, but are projected to rise to nearly 20 percent of GDP by 2016.
Of the conventional wisdom that Democrats are worse for healthcare than Republicans, Emmens said: "I don't believe that."
Many pharmaceutical executives worry about pressure on prices coming from employers who provide health insurance and individuals who have seen their co-payments increase.
"Hopefully in the U.S. we'll be able to address that more with market forces and less through government intervention," Roche Holding AG (ROG.VX: Quote, Profile, Research) chief executive Franz Humer said.
One factor driving costs is so-called biologic drugs, man-made versions of human proteins that are more complex to make and often several times more expensive than chemical-based drugs.
Legislation creating a legal pathway to approve cheaper generic versions has stalled in Congress but more Democrats than Republicans back it.
One company that wants to sell generic biologics is Abbott Laboratories' (ABT.N: Quote, Profile, Research) spin-off Hospira Inc (HSP.N: Quote, Profile, Research). Hospira Chief Executive Chris Begley said companies seeking to cut health costs are poised to benefit in the current environment.
"If you can't afford something, does it really add value?" he said, referring to branded drug prices.
Hospital companies struggling with rising levels of unpaid medical bills and are encouraged by proposals to increase insurance coverage.
The "further on the left you get, the more comprehensive their solutions tend to be and the more they care about getting everyone into the system," which would benefit the industry, said hospital chain Tenet Healthcare's (THC.N: Quote, Profile, Research) Chief Executive Trevor Fetter.
HEDGING BETS
Major drugmakers oppose several measures backed by Democrats, such as legalizing cheaper imported prescriptions from Canada and letting the government negotiate drug prices in the federal Medicare health program.
"Historically they have been seen as a little distant from the industry," said Schering-Plough Corp (SGP.N: Quote, Profile, Research) Chief Executive Fred Hassan, adding that individual Democrats have been supportive.
Companies are hedging their bets, with national polls showing Democrats have a shot at the White House and could retain control of both houses of the U.S. Congress.
The sector has significantly boosted the proportion of campaign contributions going to Democrats in the 2008 election cycle, compared with 2006, according to the Center for Responsive Politics.
Individuals and political action committees associated with the health sector have given just over half their contributions thus far to Democrats, about $3.9 million, versus $3.8 million to Republicans, according the group.
That contrasts with the 2006 election cycle, where the sector gave about two-thirds of their contributions, or $13.2 million to Republicans, versus $6.1 million to Democrats.
Smaller biotech companies may be especially vulnerable to effort to hold down drug prices.
"If you don't have a free market mechanism for pricing, it's going to dampen the investment climate, and that is going to hurt the smaller companies more than the big companies," Onyx Pharmaceuticals Inc (ONXX.O: Quote, Profile, Research) chief executive Hollings Renton said.
In the end, the industry's worries are tempered by the belief that Americans will not want to give up the idea of choice -- of pharmaceuticals, doctors or health plans.
"Even the proposals put out by the candidates are moderate," said Schering-Plough's Hassan. "Nobody is saying we are going to do away with employer-sponsored health care."
(Editing by Tim Dobbyn)
