Analyst Hemant Shah on Clinton Medicare Overhaul Plan: Comment
Bloomberg News
June 29, 1999, 4:47 p.m. ET
Washington, June 29 (Bloomberg) -- Following are comments
from Hemant Shah, an independent pharmaceutical analyst, on
President Bill Clinton's proposal to restructure the U.S.
government's Medicare health insurance program to start helping
the elderly pay for prescription drugs. Under the plan, the
government would pick up half the cost of prescription
medications up to $2,500 per year, and most Medicare recipients
would pay a monthly premium of about $20 to $44 to help defray
costs.
Shah said drug stocks, which rose today, rallied because of
opposition in Congress to Clinton's plan. ''This is exactly
what's going to happen over the next 12 months or so: any time
you see a political shift toward passage of a bill, stocks are
going to tank. Any time you see an indication that the bill is
going to die, the stocks are going to go up. This is likely to be
a political football.''
Still, Shah said a drug benefit for Medicare would
eventually be enacted; the only question is whether that change
comes quickly, he said. ''Some sort of a Medicare drug benefit
passage is inevitable,'' Shah said. ''Right now, it just looks
like a longer time, rather than a shorter time. This is going to
be the single most important issue facing pharmaceutical stocks
over the next two years.''
BancBoston's Michael King on Clinton Medicare Plan: Comment
Bloomberg News
June 29, 1999, 3:58 p.m. ET
Washington, June 29 (Bloomberg) -- Following are comments
from Michael King, a biotechnology analyst at BancBoston
Robertson Stephens, on President Bill Clinton's proposal to
restructure the U.S. government's Medicare health insurance
program to start helping the elderly pay for prescription drugs.
Under the plan, the government would pick up half the cost of
prescription medications up to $2,500 per year, and most Medicare
recipients would pay a monthly premium of about $20 to $44 to
help defray costs, a White House official said today.
The proposal ''is still being attacked by the left and by
the right -- and when you have that kind of political opposition,
it generally means very little is going to get done,'' King said.
''If the drug industry is smart, they will fight it tooth-
and-nail,'' King said, because the plan would leave drugmakers
more vulnerable to future federal controls over drug pricing even
if those controls aren't initially imposed.
''It's a camel's nose under the tent in terms of price
controls,'' he said.
King said that the negotiating of drug prices would be
better left to companies themselves.
''Where have you ever seen something offered to us by the
government that has been better than what we could get in the
private sector,'' King said. ''I think it's dead on arrival even
though they keep trying to push it.''
Washington Analysis' Loss on Clinton Medicare Plan: Comment
Bloomberg News
June 29, 1999, 1:18 p.m. ET
Washington, June 29 (Bloomberg) -- Following are comments
from Ira Loss, senior vice president of Washington Analysis, an
equities research firm in Washington, on President Bill Clinton's
proposal to restructure the U.S. government's Medicare health
insurance program to start helping the elderly pay for
prescription drugs. Under the plan, the government would pick up
half the cost of prescription medications up to $2,500 per year,
and most Medicare recipients would pay a monthly premium of about
$20 to $44 to help defray costs, a White House official said
today.
Loss said the administration hadn't shown that the adding
the drug benefit is fiscally sound. ''As with most new social
programs, the funding aspect of it is usually open to question,
and that is certainly the case here,'' he said. ''My impression
of the methodology used to finance the drug benefit leads me to
think they're on very thin ice to start. Where does the money
come from?''
Part of the problem, Loss said, is that Clinton dropped his
plan to charge higher premiums to the wealthiest patients, which
he said was politically unpopular though fiscally sound. ''Once
the administration abandoned a premium program that would be tied
to one's ability to pay, they undercut the financial viability of
the proposal.''
Focused on other big issues -- Social Security reform and
tax cuts -- Loss said he believed Congress would let the drug
benefit plan ''quickly roll into the dismal swamp.''
Loss said he the drug benefit plan to drive down the price
of prescriptions drugs, though increasing the volume of drugs
sold. ''I don't think that's a very good setup for the drug
industry if it's enacted,'' Loss said.
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