Health care execs: Boost insurance coverage

Industry officials want more Americans covered, which could help drugmakers in the near term.

By Aaron Smith, CNNMoney.com staff writer

ATLANTIC CITY, N.J. (CNNMoney.com) -- Expanding health care insurance for all Americans is the health care industry's top concern for the next five years, according to a survey, which could translate into stronger sales for the nation's big drugmakers - at least in the near term.

Healthcare leaders surveyed by The Commonwealth Fund revealed that expanding coverage to the uninsured is the number one healthcare priority facing Congress through 2012, said Katherine Binns of Harris Interactive, the research firm that conducted the survey.

But once the government gets involved in mandating wider insurance coverage, it could eventually lead to increased pressure on pricing, according to experts.

"Expansion of coverage traditionally has been good for this industry," Binns said at a drug industry sales and marketing conference in Atlantic City on Monday. "It can widen your [customer] base. But in order to fund that expansion of coverage, the government may step in to contain costs in a way that isn't necessarily to your benefit."

Jon LeCroy, analyst for Natexis Bleichroeder, said that Big Pharma could benefit from increased healthcare insurance because it would drive volume over the next few years. But eventually, the budget costs of increased coverage would cause the government to force down prices, which would squeeze drug companies.

"Initially expanded coverage tends to be good," said LeCroy. "In the short run sales go up, but in the long run it increases pricing pressure from the government."

Healthcare coverage would likely be expanded during the next presidential term, said Les Funtleyder, analyst for Miller Tabak.

"We will have more people insured [after] the next presidential election than we have now," said Funtleyder, adding that the most immediate impact would be felt by big insurers such as UnitedHealth Group (Charts) and Wellpoint Inc (Charts).

"It's good for managed care because someone's going to have to administer these programs and if it's not going to be the government, then I suspect it's going to be managed care," said Funtleyder.

The drug companies selling preventative drugs for high-risk patients - like blood pressure drugs and anti-cholesterol treatments - are the most likely to see sales rise due to ramped-up coverage, said Funtleyder. He cited Merck (Charts), Novartis (Charts), Pfizer (Charts), and GlaxoSmithKline (Charts).

The Harris survey results were divided among the best methods for expanding coverage: mandating but also subsidizing individual coverage for everyone, providing matching federal funds for existing coverage like Medicaid, establishing a government-run single-payer system, or covering everyone under Medicare.

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.