The federal election in 2020 promises to be a key moment for health-care stocks and companies linked to health and human services.
HealthCare Giant Pfizer Inc. (PFE)
Major drug makers need to decide whether to provide patients access to their drugs if Medicare decides to get out of the business of prescription drug purchases through its Open Access program, says healthcare finance expert Christopher Ehring.
Drug makers also face the possibility of reimbursement caps that could further hurt their drug revenue stream.
Erlich says the healthcare reform program could improve the health-care market and future profits, but regulations could derail that opportunity.
The department of health and human services is implementing new regulations and reviews that could impact hospitals, health insurers, and pharmaceutical companies.
Through these rules, Medicare could take away access to drugs from insurers for patients who are beneficiaries of Medicaid or Medicare prescription drug plans.
EBOLA Concerns, Terrorist Attacks
Erlich says healthcare stocks could also be affected by attacks around the globe by terrorist groups.
Tracking Ebola in Nigeria, South Africa, and Africa
Erlich said the rise of EBOLA in Africa and radical Islamic groups could lead to more attacks and disease outbreaks in the United States.
In the continental U.S., the Department of Homeland Security said it was tracking the threat of Ebola. Other violent terrorist groups, such as ISIS, Al Qaida, and Boko Haram, have already claimed responsibility for chemical and biological attacks.
If EBOLA starts spreading among U.S. residents, health insurers could reduce their coverage or lower reimbursement rates.
Erlich said companies could be affected by the move toward generic drugs.
“A generic maker of medications could steal market share from a company such as Pfizer if it owns Daraprim because a generic maker can make identical pills that will still work and still be reimbursed by Medicare,” said Erlich.
Pfizer, which makes Daraprim, is currently in the middle of a lawsuit with Turing Pharmaceuticals. Turing sold Daraprim at a high price in 2014 before acquiring it in September 2015.
If Pfizer loses the case, Erlich says the patent is compromised. Then, Pfizer could either sue for what they’re owed or charge full price to Medicare patients.
But Erlich doesn’t think any company will give up this market entirely because generic medication is cheaper for them to manufacture.