The biotech industry is beginning to assess what the impact of the new Obama administration is likely to mean for individual biotech companies.

A key concern for the industry is the likely financial implications of the Obama presidency on biotech companies, according to an article by SFGate. 

What financial concerns are at issue?

While biotech companies are definitely concerned about the bad economy and the credit crisis, they are also  concerned about an anticipated push for cheaper drug prices, which could potentially have a very detrimental impact on biotech companies, since any such increase could negatively affect the profits that biotech companies could potentially achieve on their drugs and would perhaps impact companies’ valuations as well.

Another concern for the industry is what will happen to the Food and Drug Administration under an Obama presidency, accoding to the SFGate.  During the Bush Administration, Congress criticized the Administration for how the Food and Rug Administration was run–in particular, they viewed it to be "underfunded" and "ineffective." As Adam Feuerstein of the Street.com reported: "The agency is in turmoil. Morale is low, resources are scarce and too many drug approvals have been delayed at best, or worst, have become politicized."  President-Elect Obama will presumably sink some money into the organization and try to take it in a new direction, which he may begin by choosing new leadership.  According to SFGate and  Feuerstein, a few of the names being considered include: Dr. Steven Nissen, a cardiologist for the Cleveland Clinic;  Dr. Scott Gottlieb, who worked directly under Mark McClellan when he was FDA commissioner; and Janet Woodcock, a veteran agency official who is the favored choice of drug manufacturers.

One highly anticipated change by the new administration is the likely adoption of a new view on stem cell research, reported Yahoo News, which reported that  Obama’s Transition Chief John Podesta indicated this weekend that Obama is currently reviewing President Bush’s executive order on stem cell research and may reverse that order fairly quickly.

As for other changes that might be in the works which would affect the industry, the Patent Baristas have provided an extended list of potential changes that we may see under the new administration, including but not limited to doubling federal funding for basic research over the next ten years, making the research and development tax credit permanent, and reforming the Patent and Trademark Office.

All in all, it seems clear that the new administration will bring "change" to the biotech industry; however, the jury is still out as to whether any such "change" will be for the better or for the worse.   The industry is hoping–like the majority of Americans that voted for Obama on election day–that the "change" Obama will bring will be for the better.

With all the talk by the candidates of reforming healthcare this political season, it is interesting to consider the impact that a win by each candidate will have on the biotech industry.  As this race unfolds, the California Biotech Law Blog intends to follow the positions of the candidates that may have an impact on the industry. 

Robert Goldberg wrote an interesting column this week for Drugwonks and The Weekly Standard  looking at the John McCain healthcare plan, which has received little if any attention by the media.  Goldberg first addresses the plans proposed by the Democratic presidential candidates.   In contrast to McCain, who views the current Veteran’s Health Administration ("VA") as being severely broken, Goldberg explains that Barack Obama and Hillary Clinton view the VA is the "starting point for the Democratic plans for universal health care."

Goldberg writes:

Both Hillary Clinton and Barack Obama want to expand the VA’s electronic health care system to the rest of the country. Obama has promised to spend $50 billion on electronic health records based on the VA model. And Clinton likes to claim credit for that model, which she calls an astounding success. . . .

In fact, as a government audit discovered, the VA’s paperless system has created a huge bottleneck, losing track of 53,000 veterans.. . . according to internal VA audits, 25 percent of all vets wait more than 30 days for their first exam. Of the veterans kept waiting, 27 percent had serious service-connected disabilities, including amputations and chronic problems such as frequent panic attacks. Iraq war vets often have to wait six months for their first appointment. In some VA hospitals, vets wait 18 months for surgeries–a record worse than Canada’s or England’s national health care systems. The VA’s budget for its health care system has doubled since 2001. . . .

In contrast, Goldberg says that the McCain plan "boil[s] down to freedom of choice," explaining as follows:

McCain’s plan is based around patient-centered initiatives that already have broad support among Republicans in Congress. They include letting people buy health insurance nationally instead of only from state-regulated firms; giving people the choice of purchasing coverage through cooperatives or other organizations (churches or civic groups, for example); expanding health savings accounts; and making health insurance portable by giving people tax credits of up to $5,000 per family to buy their own coverage instead of getting it through an employer.

His chief concern is for people to take ownership of their health care. McCain likes to note that "Ronald Reagan said nobody ever washed a rental car. And that’s true in health insurance. If they’re responsible for it, then they will take more care of it." At the heart of McCain’s proposals is his effort to allow veterans, particularly soldiers returning from Iraq with traumatic brain injury and mental illness, to get care anywhere rather than just through the Veterans Health Administration (VA). . . .

It is likely that the McCain’s plan will receive additional scrutiny down the road, as healthcare is likely to continue to play a key role in the election.  However, Goldberg gives us a first glimpse of the McCain position on healthcare reform.  There is little doubt that the candidates have a very different perspective on what that reform might look like. 

But how might the McCain view affect the biotech industry?  Well, all in all, I would argue that the biotech industry would most benefit from the McCain position, since ownership of health care would likely lead patients to pursue the best available treatments, to the extent that they can afford them.  In contrast, the Obama and Clinton positions would increase health care availability for the population as a whole, but would likely limit options and treatment availability and potentially even limit the profitability of the biotech industry as a whole.

The California Biotech Law Blog will continue to look at these issues as further information about the candidates’ positions is revealed.   We welcome comments on these issues from our readers.  What do you think: how would the candidates’ positions on healthcare reform likely affect the biotech industry as a whole?

Stem cell biotech companies are looking forward to the next presidential administration, reports CNN Money.  All three of the leading presidential candidates–Senator John McCain, Senator Barack Obama, and Senator Hillary Clinton–have expressed a more tolerant view toward stem cell research than has the current President Bush. 

CNN Money reported:

Bush has twice vetoed legislative attempts to expand the funding, including those backed by McCain, Clinton and Obama. In reference to Bush’s policies, Obama has said, "Stymieing embryonic stem cell research is a step in the wrong direction." Clinton has called for funding for "additional cell lines in order to pursue the promising avenues for research." McCain has said "stem cell research has the potential to give us a better understanding of deadly diseases and spinal cord injuries affecting millions of Americans."

Following his second veto in 2007, Bush said the legislation "would compel American taxpayers – for the first time in our history – to support the deliberate destruction of human embryos." Instead, the president touted the therapeutic potential of stem cells taken from adult tissue.

Given the support by President Bush of the concept of taking taking stem cells from adult tissue and umbilical cords, the companies that have utilized this methodology such as Aastrom, Cytori Therapeutics , Stemcell, and Osiris Therapeutics have been somewhat shielded by the ongoing controversy, reported CNN Money. In contrast, the companies using the methodology of deriving stem cells from human embryos such as Geron, Advanced Cell Technology, Novocell and Neuralstem have found themselves right in the middle.

CNN Money predicts, however, that the new administration will benefit all of these companies, regardless of the methodology used, since investors will have a more positive view about the political climate for these companies and the funding is likely to be made available to them.