Future Uncertain for U.S. Drug Makers
With the health care debate on hold for the time being drug makers are facing the uncertainty of the impact that the lack of reform will have on their collective futures. As part of the expectation that a health care bill would pass, pharmaceutical companies agreed to provide the government $80 billion in rebates over a period of ten years to help fund reform. With the legislation stalled the future of those rebates remains unclear.
In addition, drug companies face the possibility that with the new budget the government may now attempt to collect taxes on patents and overseas assets. The pharmaceutical companies would be hard hit with such a tax at the same time they are facing uncertainty in medication sales.
With exclusivity rights expiring on many brand name drugs and increasing sales of low cost generics, many large names in the industry have lowered earnings forecasts through 2012. Drug makers fear that with the focus on decreasing deficits the government might attempt to collect on the discount promise for Medicare and Medicaid programs without the promise of an increased customer base that the government run universal health care would have provided.