Lobbying strategy recommendations for Abbott Labs in healthcare policy

Abbott Labs Lobbying Recommendations

Lobbying Recommendations for Abbott Labs

Fiscal policies by the Federal and State governments have a direct effect on the ability of Abbott Labs to remain in a growth position. As a member of the drug and medical device manufacturing market segment, health care & medical policies have the greatest impact on business. Abbott Labs includes lobbying funds as part of its annual budget. This is a prudent measure due to the direct impact that Health Care policy has on both revenues and profit from the lab. Lobbying money must be targeted towards issues that have a direct impact on Abbott's current and future product lines. The following outlines several suggestions for prudent use of Abbott's lobbying budget in the 2013 fiscal year.

Medicare Prescription Drug Savings and Choice Act of 2009

H.R. 684 proposes to require the U.S. government to negotiate drug prices down for Medicare patients. The results of this policy, should it go into affect, will have a negative impact on Abbott's profits. A significant portion of prescription drug users are Medicare patients. Abbot should sponsor opposition to this bill and support any candidate that opposes it.

The official title of the bill is "Medicare Prescription Drug Savings and Choice Act of 2009." Under the proposed form of the bill, doctors will be required to administer the least expensive alternative for patient care, unless it is overwritten by medical necessity (H.R. 684, 2009). This plan would save taxpayers and the governments, but pharmaceuticals companies such as Abbot, would have to soak up the slack. This means lower costs for consumers, but it can spell disaster for the than the pharmaceutical industry.

Health Care Reform and Abbot Labs

Health Care Reform has been a key topic of discussion in all areas of American society. This issue affects everyone on some level. For those in the pharmaceutical industry the outcome of these reforms can have an impact on the ability to develop new products and it affects the regulatory environment surrounding them. The bills addressed in this recommendation will have a significant impact on both health care and the pharmaceutical industry. These bills will directly affect revenues and profit generated by Abbott Labs.

When taken in aggregate, these two bills appear to balance each other. However, this net effect is not as simple as it would first seem. The Medicare Prescription Drug Savings and Choice Act of 2009 would cost much more to the pharmaceutical industry than the Increase in Fees for Brand Name Pharmaceuticals would provide in additional revenues. The logic behind the Increase in Fees for Brand Name Pharmaceuticals is that consumers would use the additional savings on prescription drugs to purchase more drugs, therefore benefiting the pharmaceutical industry. However, this is a general assumption and it is not known if seniors would actually pump the savings money back into the pharmaceutical industry, or if they would spend it elsewhere. Therefore, additional revenues to the prescription drug companies are only theoretical.

Lobbyists have to consider not only the net effect of the proposed bill on their company, they also have to consider the effect on public relations. When pharmaceutical company lobbyiist backs a certain bill, word will leak out the public via normal media channels. Many consumers do not pay attention to lobbyists, but some do. Abbott's opposition to the Medicare Prescription Drug Savings and Choice Act of 2009 would not have a significant impact on consumers because the price negotiation is primarily between Medicare in the pharmaceutical companies. However, failure to back the Increase in Fees for Brand Name Pharmaceuticals if would have a significant public relations outcome, because consumers may perceive this to be price gouging and a lack of concern for their welfare by Abbott Labs.

Abbot Labs must protect is position in terms of public relations in order to preserve shareholder value. Although preserving shareholder value is of utmost importance, Abbott must sometimes focus lobbying efforts on actions that preserve public image. At times, preserving public image is important in the interest of preserving shareholder value.