On Monday President Obama named Kansas Governor Kathleen Sebelius to lead his ambitious health reform effort, kicking off a week focused on revamping an inefficient healthcare system whose cost he fears is hurting the U.S. economy.
As you might remember some of Obama’s reforms include providing insurance to those who don’t currently have coverage, making it easier for people to get generic drugs, and streamlining medical records.
As a result investors pummeled a wide range of companies in the healthcare space – everything from Merck to UnitedHealthcare -- reasoning that the new rules would strangle profits.
But why is that?
CNBC’s Mike Huckman explains that “the President is proposing that there be greater rebates to Medicaid on the popular drugs that Medicaid purchases. That brings down margins for Big Pharama."