Drugmakers Braced for US Election Results

Pharmaceutical companies are bracing themselves for a rush of healthcare changes if Democrats win big in US elections this week, giving nearly equal campaign contributions to both parties for the first time in recent history.

For years the industry gave most of its campaign cash to Republicans, who tended to back policies favoured by drugmakers. But financial alliances began shifting when Democrats took control of the US Congress in 2006.

With polls showing Democrats likely to gain a greater majority in Congress and perhaps capture the White House for the first time in eight years, drugmakers' funds have followed.

The industry's political action committees and employees gave 49% of their contributions to Democrats ahead of this week's elections. This is a 31% jump from 2006, according to data from the Center for Responsive Politics, a non-profit group that tracks campaign contributions.

Drug companies "are looking into the future and seeing that once again their issues are going to be front and centre," says Massie Ritsch, a spokesman for the centre.

Among the issues high on the agenda of congressional Democrats are negotiating lower prices in Medicare's prescription drug programme, allowing generic versions of expensive biotechnology drugs and expanding health benefits to uninsured Americans.

Any attempt to expand health insurance coverage could impact on prescription drug sales. Use of medications may grow, but companies could face pressure to lower prices often attacked as too high.

The companies are "laying the groundwork to get the access they need to express their points of view," Ritsch says.

That will be an uphill battle, especially in light of the Wall Street meltdown that has highlighted the excesses of companies in general, says Kim Monk, a healthcare analyst at Capital Alpha Partners.

"The overarching concern for the industry...is a perception that pharmaceutical companies have nice fat margins and there's a lot of money there," she explains. "There's just not a lot of sympathy toward the industry, even on the Republican side of the aisle and certainly not on the Democratic side."

Companies like Pfizer are working to change that.

"There has been a lot of criticism," says Dolly Judge, a Washington-based lobbyist for the world's largest drugmaker. "I think it's a big job for [pharmaceutical companies]. How do we improve the public's perception of the industry?"

Political support for pharma

The industry's main lobbying group, the Pharmaceutical Research and Manufacturers of America, tapped former Democratic staffer Bryant Hall for its top lobbying job last month.

Democrats currently control the US House of Representatives 235-100, and polls show they could gain upward of 30 House seats. In the Senate, where they have 49 members, the party could win up to nine seats. Republicans also have 49 Senate seats while two members are independents.

Democrat Barack Obama, the Democratic presidential nominee, leads his Republican opponent John McCain in nationwide opinion polls, but some surveys show the race tightening.

It is unclear who might lead the next president's healthcare team. A few names have been floated as possible heads of the Department of Health and Human Services or the US FDA, which decides if new medicines can come to the market.

Drugmakers, meanwhile, have shifted campaign donations.

For the 2008 election cycle, makers of drugs, medical products and dietary supplements gave $11m to Democratic candidates and $11.4m to Republicans through mid-October. Obama received nearly $1.2m of that money while McCain took in nearly $530,000. To be sure, McCain is no friend of drugmakers, having attacked them on the campaign trail.

Top contributors to federal candidates and parties were Pfizer, Amgen and Johnson & Johnson.

Both Obama and McCain back the idea of letting the Medicare health insurance programme negotiate lower prices for medicines, a move the drug industry strongly opposes. The candidates also support greater use of cheaper generic drugs and importation of medicines from other countries.

Democrats in Congress may quickly work to give Medicare the negotiating power, which companies say would lead to government price controls and hurt investment in research for new drugs.

Lawmakers in both parties also are keen to pave the way for approval of cheap, generic copies of expensive biotech drugs, something strongly urged by generic drugmakers.

Widening the pool of Americans who have health insurance – probably the most difficult task – also looms.

While pharmaceutical companies said they are eager to see more patients with access to healthcare and medications, any move to expand coverage could also pressure companies to lower prices.

Jim Greenwood, head of the Biotechnology Industry Organization, says companies "worry about a short-sighted approach toward cost containment."

"If new policies restrict the opportunity for new products to be reimbursed, then it will drive away investment dollars," he says.