Almost immediately after Pelosi & Co. seized control of Congress by Democrats for the first time in a dozen years, the predictions of a falling sky started from a surprising array of business interests: concerns about a higher federal minimum wage, immigration law changes, trade agreements, increased taxes, even rumors of Sarbanes-Oxley reform. But among all those worries, two industries that could feel the largest impact are also ones with the most clout: insurance companies and drug makers. For those such as local public companies Amgen Inc., Health Net Inc., Simulations Plus Inc. and Mannkind Corp., the shift in control could bring both benefits including a resurrected research and development tax credit and setbacks such as changes to how the government buys prescription drugs. “It’s really a mixed bag,” said Jim Greenwood, a seven-term Republican congressman from Pennsylvania who now serves as president and CEO of the Washington, D.C., advocacy group, Biotechnology Industry Organization. Greenwood said that Democrats have already shown signs of support for increasing funding for the Food and Drug Administration and National Institutes of Health and for research, especially stem cell programs. But that’s where the pluses end, Greenwood said. Democrats will almost certainly ask for ramped-up focus on price reporting, safety issues and clinical trial oversight. There’s also the issue of the Medicare Part D prescription-drug benefit hammered out by the Republicans in 2003, which, as it now stands, allows private insurers to negotiate prices with drug companies. Greenwood said the biopharmaceutical industry is nervous that Democrats will work to repeal that provision to allow the government to bargain with drug companies for volume discounts, instead putting the government in charge of negotiating prices. While that would lower costs for seniors, it would almost certainly dig into profits for pharmaceutical and health insurance companies. Greenwood, who served in the U.S. House from 1993 to 2005, said the possible changes make drug makers nervous. “We think that system is working (because) premiums are lower than people expected and there’s widespread enrollment in the plan,” he said. “We think it’s not broken and it doesn’t need to be fixed.” Dr. Bob Taketomo, a former head of pharmacy for the Woodland Hills managed healthcare provider Health Net Inc. who now runs a pharmaceutical services company in La Jolla, notes the shift in control highlights some of the issues with the Medicare plan, which he said was under-budgeted. “Democrats traditionally have been advocates for increasing care and entitlement,” he said. “There’s a challenge there: How do you offer richer benefits at a lower cost?” Of course, any impact could be stifled by the Democrats’ razor thin majority and President Bush, who will likely strike down any Medicare changes in addition to any moves to reexamine stem cell research. Despite the predictions, Greenwood noted, it won’t be until the new Democrat-controlled Congress is in session next year before the impact is truly felt. “It remains to be seen what they have in mind,” he said. Image Feels Tower’s Pain The demise of Tower Records and a downturn in DVD sales are taking a toll on distributor Image Entertainment Inc. Quarterly losses increased from $613,000 or $0.03 per diluted share a year ago to $3.8 million or $0.18 per diluted share. Revenue decreased 4 percent to $22.8 million, the company reported. Image blamed the poor returns on two of its largest clients Musicland and Tower Records going belly up, along with $443,000 in expenses related to fending off a move by Lionsgate to gain control of Image, which failed. Martin W. Greenwald, Image Entertainment president and CEO, said in a statement that the company is feeling the effects of a changing industry. “DVD shelf space is contracting at brick-and-mortar retailers across the country,” he said. “This market shift is affecting independents and major studios alike. We are adapting to these changes by stepping up our sales efforts to online retailers and the distributors who support them,” such as Amazon and Netflix. Image plans to lay off some staff and close an office in Britain to address the shortcomings, it said. Briefly The Westlake Village real estate investment trust LTC Properties Inc. reported third quarter net income available to shareholders tallied $6.8 million, or $0.29 per diluted share, up from $5.9 million or $0.26 per share for the same 2005 quarter. Revenues also increased from $17 million last year to $18.1 million for the quarter ended June 30. The Woodland Hills wagering website owner Youbet.com Inc. set a new company record Nov. 4 for the most online bets placed in one day The handle for the company was $5.7 million in bets for the 23rd Breeders Cup. Last year, it captured $4.2 million in wagers for the race. The previous record was set on the day of the 2006 Kentucky Derby. Respiratory care device maker Chad Therapeutics Inc. reported its revenue declined to $4.9 million from $5.4 million for the first three months ended Sept. 20. The Chatsworth company also tallied a net loss for the second quarter of fiscal 2007 of $307,000, or $0.03 per diluted share, compared to a net loss of $210,000, or $0.02 per share, for the year ago quarter. Staff Reporter Chris Coates can be reached at (818) 316-3124 or at [email protected]