The Affordable Care Act, also known as Obamacare as it is president Obama's signature health care law, is broadly acknowledged as a far-reaching law that affects many parts of the U.S. health care system. Obamacare's provisions are recognized to affect the competitive landscape for insurers, hospitals, and pharmaceutical benefit managers. But did you know that Obamacare also directly affects biotech stocks?
In its most recent 10-K, Celgene (NASDAQ:CELG) acknowledged this reality by stating that "The Affordable Care Act will affect our profitability." Unfortunately, how much and in what way is difficult to predict, as the 10-K continues,
"We expect that the rebates, discounts, taxes and other costs resulting from the Affordable Care Act will have a significant effect on our profitability in the future. In addition, potential reductions of the per capita rate of growth in Medicare spending under the Affordable Care Act, could potentially limit access to certain treatments or mandate price controls for our products. Similarly, the promulgation of new regulations concerning rebates, discounts, taxes and other costs, or the interpretation and enforcement of new or existing regulations by government agencies could affect our profitability in ways that are difficult to predict."
In this video, Motley Fool analysts David Williamson and Michael Douglass discuss which biotechs investors should watch and which drugs may be most affected by the law.
David Williamson owns shares of AbbVie. Michael Douglass has no position in any stocks mentioned. The Motley Fool recommends Celgene and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.