A couple of decisions out of the U.K.'s National Institute for Health and Clinical Excellence (NICE) this week have different pharmaceutical companies smiling and frowning. Apparently, NICE, which is responsible for advising the government on which drugs it should pay for, is only nice to some drugmakers.
First, the bad news: NICE recommended against paying for Johnson & Johnson
On the flip side, NICE has reversed its stance on certain Alzheimer's drugs. Where it once limited their use to patients with moderately advanced forms of the disease, now NICE recommends allowing patients to begin use of Aricept from Eisai and Pfizer, Shire's
NICE only controls the payment for drugs in one country, so a yes or no decision from them, or a negotiation on the price, isn't the end of the world for drugmakers. But investors should be concerned about worldwide pricing in general, especially since it’s the top argument in favor of health-care reform stateside.
The obvious, albeit most controversial, solution for reducing prices is to discourage the use of high-priced medications when cheaper options are available, or when the drug doesn't work well enough to justify the price. Americans have grown accustomed to doctors and patients making medical decisions with little oversight, which has helped the drug industry flourish. If that process changes, drugmakers' prosperity may, too.
That certainly wouldn't be nice for share prices.
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