Senate Controlled by the US Democratic Party

Even though the US Democratic Party controls both the House of Representatives and the Senate, most healthcare investors are unconcerned about the threat to prescription pricing. This could be because, considering how thin the Democratic majority in the Senate is, the chances of bills like HR3, which would allow the US government to negotiate medication prices directly, the passing seems to be poor.

However, what I learned in physics class in high school suggests that the danger to pharma’s long-term operational model and investor returns is far more giant than it appears. Furthermore, the unwillingness of legislators to reduce patients’ out-of-pocket expenditures has generated intense political pressure.

This is starting to show up in practice. The recent support by the Biden administration for abandoning intellectual property rights on Covid-19 vaccines sparked outrage among drug companies, who feared a slippery slope that would lead to industry shake-up. However, the ultimate threat to pharma in the face of unacceptably high medication prices may come from elsewhere: growing bipartisan support for increased antitrust inspections and punishment in the business.

Even during Trump’s presidency, there was evidence that the US Federal Trade Commission was becoming more muscular in its antitrust enforcement. The $63 billion agreement between AbbVie and Allergan, the Irish-based developer of Botox, required a second request for information from the FTC and was approved by commissioners in a 3-2 vote last month.

When Bristol-Myers Squibb agreed to buy biotech giant Celgene for $90 billion in 2019, it made one of the largest pharmaceutical deals in history. However, it was forced to sell a $13.4 billion psoriasis cure.