Biden administration – What can the healthcare industry expect?
As Joe Biden takes the reins at the White House, pharmaphorum asks experts how his presidential tenure may influence the global healthcare industry.
"I think the Biden administration will have only an incremental impact on the healthcare industry as a whole,” said Maxim Jacobs, CFA, managing partner and director of research at Edison Group.
“With a slim majority in the House and an evenly divided Senate it will be tough for him to get anything radical through Congress. He ran on protecting and expanding Obamacare and I think that is probably what he will try to do. He’ll be able to protect it but I’m not sure about his ability to expand it or enact things like the public option.”
Given other challenges in the US that need to be dealt with first - such as the COVID-19 response, additional Medicaid funding and economy and tax reform - dramatic changes are unlikely, said Mark Brewer, life sciences research director for finnCap.
“Sweeping healthcare reform, in the way that it was prioritised in the Obama administration, is unlikely to be top of the agenda, partly also due to the narrow majority that the Democrats have in the House of Representatives and the Senate and the time/effort that would be required to try and push through such legislation without any guarantee of success. We don’t believe there will be draconian price cuts, for the same reason.
“The industry should continue to prosper with innovation driving new product introductions and consequently valuations. Post-COVID recovery in global healthcare systems should also drive the broader healthcare sector, which should benefit device companies and those focused on elective surgery rates,” said Brewer.
Biden could put additional scrutiny on drug prices but more drastic measures, such as allowing Medicare to negotiate with pharma companies directly, are still unlikely, according to Tim Xu, investment associate at Boston, US-based Arix Bioscience.
"Policy-wise, President Biden will aim to protect and restore Obamacare, which to many remains a band-aid solution to the US’ healthcare problem. It is quite likely that cornerstones of the Affordable Care Act will be found unconstitutional by the Supreme Court, such as the individual mandate.
"As ever, it takes a “supermajority” of over 60 votes to get any major legislation through the Senate, so longer-term Democratic wishlist items like a public option or single payer are unlikely. What this means for the pharma industry is likely business as usual, at least until the midterm elections in 2022."
Generic and opioid-alternative companies could benefit from expanded coverage, if Biden changes policy, according to analysts at Jefferies. In the EU, pharmaceutical companies like Roche could have the largest exposure to Medicare Part B drug reforms due to the proportion of its products that are either IV infused or administered in the physician's office.
“Some of this apparent threat is already de-risked, given biosimilar erosion of Rituxan, Herceptin and Avastin which have wider pricing disparities ex-US than the newer launches at more competitive prices such as Ocrevus, Hemlibra and Tecentriq. Ex-US stocks with less Part B exposure are Novo Nordisk, Novartis and GSK,” said Jefferies’ Peter Welford.
One area where Biden might be able to make a big difference is pandemic preparation, according to Jacobs. “COVID has been a global disaster and unfortunately there are other pathogens that can be as or more deadly. He’ll probably want greater investment in biodefense so the country can increase its stockpile ahead of the next pandemic event, which may increase industry focus on vaccines, antivirals and antibiotics."
Science first
While Donald Trump had a strained relationship with the scientific community, Biden is keen to strengthen its position. This support could help the US preserve its reputation for being at the forefront of research, science and innovation. “It is very clear that Biden is using science and not public opinion to drive change,” ImaginAb CEO, Ian Wilson told pharmaphorum.
“He has publicly stated he expects newly appointed presidential science adviser and the director of the Office of Science and Technology Policy (OSTP), Eric Lander and his team to address questions about the future of science and technology and recommend how his administration can combat public health threats, mitigate the impact of climate change, keep the country a world leader in innovation, use science to improve social equity, and strengthen the US research enterprise.
“This is the first time in history the science adviser will be a cabinet-level position. That, along with the 100 day promise to immunise 100 million people, increased stimulus packages to ensure biotech companies and smaller businesses can ride out the pandemic, and a focus on making the US a leader once again in medical science, gives hope for a new beginning.”
