Pharma feels threatened by new U.S. austerity push

All the talk of deficit-cutting in Washington has drugmakers spooked--and has industry lobbyists working overtime. Pharma companies are fighting potential new Medicare drug rebates. Whispers about pulling the direct-to-consumer advertising tax deduction have surfaced again. As the next stage of cuts looms, who knows what other ideas Washington will come up with?

And the U.S. cost moves come amid austerity measures elsewhere, especially in Europe, where even richer countries such as Germany have targeted drug prices for reductions. So, the U.S. threats seem even more dire; after all, prices have tended to be higher there than in other countries, and that's helped drugmakers suffering from price negotiations elsewhere.

But as the Wall Street Journal Health Blog reports, analysts aren't as worried about U.S. austerity. Some of the potential cuts won't affect pharma directly: Medicare spending moves, for instance. If the government cuts reimbursements for cancer-drug therapy, oncologists will feel the hurt first. Sure, doctors may press for discounts up the line, but they can't mandate price cuts.

What's more, some drugmakers are more insulated from government cuts. Roche and Novartis, for instance, Sanford C. Bernstein analysts said (as quoted by the WSJ). Merck, Sanofi and Pfizer may also have a measure of protection.

- read the Health Blog post