Vote benefited credit card, drug industries
By TED GRIFFITH / The News Journal
Delaware's credit card and pharmaceutical industries have one thing in common: Both benefited from the outcome of Tuesday's election, analysts said.
President Bush's re-election and Republican gains in Congress mean that proposed legislative reforms - which supporters said would help consumers but Wall Street feared would hurt profits - now have much less chance of being enacted, the analysts said.
The credit card industry is a major employer in Delaware, with No. 3 U.S. card issuer MBNA Corp. ranking as the state's No. 1 private-sector employer. Other major credit card issuers, JPMorgan Chase & Co., Citigroup, Discover and Bank of America, employ thousands in the state.
The pharmaceutical industry also has significant representation in the state. London-based AstraZen- eca, one of the world's largest drug makers, has its U.S. headquarters in Fairfax and employs about 4,800 people in Delaware.
On the campaign trail, Democratic presidential nominee John Kerry had been sharply critical of both the credit card and pharmaceutical industries.
Kerry called for credit card reforms, including curbing so-called universal defaults - the practice of raising card holders' interest rates if they're late in paying off another company's bill. The Massachusetts senator also favored restrictions on fees and additional disclosure requirements, which were opposed by the industry.
Following Kerry's defeat, the card industry has little reason to fear that his proposals will move forward as the legislative and executive branches of the federal government remain in Republican hands, analysts said. Bush avoided taking a position on Kerry's credit card proposals during the campaign.
Employees of Wilmington-based MBNA ranked among Bush's top campaign donors, contributing a total of $351,000 to the president's re-election effort, according to the latest data from the Center for Responsive Politics.
"Republicans have been friendlier to business and, in particular, the credit card industry," said Art Clark, managing partner of Business Dynamics, a credit card consulting firm in Nyack, N.Y. "It's definitely seen as a positive for the industry that Bush will have a second term."
The same holds true for the pharmaceutical industry, analysts said. Democrats are seen on Wall Street as being much more likely to support caps on the prices of prescription drugs than Republicans. Kerry had blasted the pharmaceutical industry for the high cost of prescription drugs, and he supported legalizing the importation of cheaper drugs from Canada, an idea opposed by the industry. In addition, Kerry called for the removal of "artificial barriers" to the approval of less expensive generic drugs.
Generic drugs can cut deeply into the profits of a pharmaceutical company, as AstraZeneca's experience with Prilosec demonstrates. Sales of Prilosec, once the top-selling prescription drug in the world, have plunged since the late 2002 arrival in the United States of generic versions of the heartburn remedy.
"There's some relief within the industry that Kerry is not in there," said Susan Cross, a pharmaceutical analyst with Wilmington Trust.
But what may be good for pharmaceutical and credit card companies, may not be good for consumers. Advocacy groups say some of the needed reforms backed by Kerry will now be consigned to legislative limbo.
"My sense is that there will be a less hospitable climate for moving forward on consumer protection issues," said Russ Haven, an official in the New York office of Public Interest Research Group, a consumer advocacy group.
However, at least for the pharmaceutical industry, there's likely to be one issue that doesn't go away - the cost of prescription drugs, Cross said. The Wilmington Trust analyst said that proposals to rein in drug costs may have lost some momentum, but she said they won't disappear altogether because of continuing demands from the public.
"This issue of high drug costs is so big, it can't be skirted no matter who is in office," Cross said.