28 jun: Vivendi Chief Executive Jean-Bernard Levy Steps Down
28 jun: French Police, Tax Authorities Search Microsoft Office
28-06-2012 21:01:00

UPDATE: Companies React to Top Court's Decision on Health Care

Relateret indhold

(Adds reactions from drugstores, other companies, trade groups)

By Saabira Chaudhuri

Companies across a variety of sectors related to health care weighed in Thursday after the U.S. Supreme Court upheld the Obama administration's health-care reform law, in one of the court's most highly anticipated decisions in years.

The ruling means different things to different sectors. Medicaid insurers, hospitals and diagnostic test makers stand to gain from the expanded coverage, while insurers and medical device companies are likely to face pressure from certain provisions.

The Supreme Court's decision, made on the final day of its 2011-12 term, leaves intact the heart of Mr. Obama's law: whether Congress could require most Americans to carry health insurance or pay a penalty. It also leaves hundreds of other provisions in place, including those setting up marketplaces in 2014 for people to buy coverage.

Among the companies commenting Thursday:

Insurers

Insurers will see pressure from the ruling on coverage requirements, such as not pricing insurance based on medical history and having to cover people with pre-existing conditions. Insurers have said this would cause chaos in the market because people may wait until they are sick to sign up for coverage.

-Aetna Inc. (AET) said the decision doesn't change its business strategy and it will fully comply with the requirements of the Affordable Care Act. Shares were down 3% to $39.72 in recent trading.

-Cigna Corp. (CI) Chief Executive David Cordani said on a press call his company isn't tethered just to the market for individual health insurance or any other, and also highlighted his firm's fast growing international business that falls outside U.S. health law. Cigna also said it has equipped its call center hotline with a dedicated team to answer questions about the Supreme Court ruling, will engage with customers on Facebook and Twitter and offer information on its website dedicated to explaining reform - www.informedonreform.com. Shares slipped 2.5% to $44.27 in recent trading.

-Health Net Inc. (HNT) said it has been working to ensure it complies with the Act's provisions and it will communicate with members to help them understand what the changes mean for them. Shares slid 3.2% to $24.36 in recent trading.

-Humana Inc. (HUM) said the ruling doesn't affect current coverage for its members. It also said the law falls short in controlling high health-care costs and the premium tax will unfairly push up costs for small businesses and seniors. Shares fell 1.7% to $78.23 in recent trading.

Pharmaceutical and Biotech Companies

The health law creates an abbreviated licensing pathway for biosimilar drugs, while setting 12 years of exclusivity for original biologics. Experts have said companies that want to compete with these original biologic drugmakers will have to submit to a longer and more expensive application process.

-Eli Lilly & Co. (LLY) Chief Executive John C. Lechleiter said he expects the health-care debate to continue despite the ruling and Lilly will continue to engage in the conversation around future reforms. "Lilly will continue to advocate for policies that sustain and encourage medical innovation--and fight against policies that would undermine it," he said. "Modern medicines are an indispensable part of enhancing the quality and reducing the cost of health care." Lilly shares were down 0.5% to $41.74 in recent trading.

Drugstore Chains

For pharmacies, the additional number of insured Americans could provide a boost to business.

-CVS Caremark Corp. (CVS) said it will continue to work with policy makers to solve the ongoing "health-care cost/quality access" dilemma. "We believe effective pharmacy care has an important role to play in managing health care costs, and we are committed to making innovative solutions available," Chief Executive Larry Merlo said in a statement. Shares slid 0.6% to $45.71 in recent trading.

-Walgreen Co. (WAG), in a prepared statement, said "We share America's vision for a better and more affordable health care system. In addition, we will continue expanding the role of health-care providers at our Take Care Clinics to offer convenient primary care," such as health testing and immunizations. Walgreen shares dropped 1.5% to $28.99 in recent trading.

Health-Care Information Technology Companies

Stern Agee analyst Greg Bolan said the ruling doesn't directly affect health-care IT firms, which are currently seeing benefits from the American Recovery and Reinvestment Act. However, firms could see a trickle-down spending effect from hospitals, which will likely have fewer patients that are unable to pay.

-MedAssets Inc. (MDAS) Chief Executive John Bardis said, "For all its unknown consequences, one way or another, the Affordable Care Act will force pricing to become more rational and market driven." Shares of MedAssets were up 1.4% to $13.11 in recent trading.

Health-Care REITs

Analysts say the ruling brings a sigh of relief to real-estate investment trusts, as with the fate of the mandate clarified, hospital operators can forge ahead with plans to expand, solidify space requirements or make cash-flow projections in anticipation of a swell of newly insured patients.

-Medical Properties Trust Inc. Chief Executive Ed Aldag said the ruling should inspire investors to return to health-care real-estate stocks that have been pummeled because of the uncertainty. "Now that that outcome (is) made, I think people will get back into these stocks. From that standpoint, it will help our stock price, which obviously helps acquisitions," he said. Shares of Medical Properties were up 2.7% to $9.32 in recent trading.

Trade Groups & Associations

Trade groups and health-care associations offered a range of responses to the Supreme Court ruling. Some, like the American Diabetes Association, AARP and Mental Health America applauded the law, highlighting the good it has already done.

"The law is already improving access to care and reducing costs," Mental Health America Chief Executive David Shern said. "More than 2.5 million young adults who were uninsured have gained coverage because of the provision that allows them to stay on their parents plan till the age of 26."

Others, like the Council for Affordable Health Insurance and Independence Blue Cross, were critical, citing increased costs that will be associated with the ruling as a cause for concern.

"The law does not make great progress in improving patient care or lowering health-care costs for our customers," Independence Blue Cross Chief Executive Daniel J. Hilferty said. "What's more, major provisions will raise costs for our customers and disrupt coverage unless they are addressed."

Still others like the American Academy of Ophthalmology were more measured, saying the ruling "is just one chapter in a book that is still being authored. The outcome of the November elections will be another important chapter."

-Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com

--John Kell, A.D. Pruitt and Jon Kamp contributed to this article.

(END) Dow Jones Newswires

June 28, 2012 15:01 ET (19:01 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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