Associated PressAs the presidential election draws near, many on Wall Street are growing nervous about the potential effect of Democratic candidate John Kerry's platform on prescription drugs, and how it might reduce the earnings of the companies that produce them. But some analysts say curbing drug prices is bound to become a larger issue in the years ahead, no matter who controls the White House.
Kerry's plan includes a number of proposals to cut the cost of prescription drugs, including allowing the reimportation of medicine from outside the United States, changing the Medicare law to allow the government to negotiate drug prices directly, and lowering certain barriers to generic drug competition. The changes would almost certainly lead to lower earnings for pharmaceutical companies, and some argue they would ultimately stifle innovation within the industry.
As a result, drug stocks have come under pressure; the pharmaceutical HOLDRS, a type of exchange-traded fund that tracks the value of about 20 drug stocks, has dipped 5.2 percent this year. Though President Bush's lead over Kerry in polls is widening with just seven weeks left before the election, analysts say drug company share prices could falter even more if Kerry shows signs of narrowing the gap. ..