During a press conference (the first since winning the November elections) on Wednesday 11th January, Donald Trump said that the industry is “getting away with murder”, promising that he would change the way federal government pays for drugs in the Medicare program as well as he would force drug and biotechnology companies to bid for the government’s business.
The President-elect has indeed claimed that the U.S. could save money: “We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.”
As Reuters reports, Medicare, which covers more than 55 million elderly or disabled Americans, spent $325 billion on medicines in 2015.
Trade group PhRMA’s CEO Steven Ubl said in a statement “Biopharmaceutical companies invest more than $70 billion a year in research and development in the United States – more than any other industry in America – and are responsible for 4.5 million American jobs” and also “We look forward to working with the new administration and Congress to advance proactive, practical solutions to improve the marketplace and make it more responsive to the needs of patients.”
Also Brent Saunders, Chairman & CEO of Allergan commented Trump’s press conferece and tweeded: “Ultimately, we want same thing as PEOTUS 1) supportive enviro 4 innovation 2) pt access & affordability of Rx 3) smart people w good US jobs”
Stock market in U.S. showed its quick response to Trump’s statements as iShares Nasdaq Biotechnology ETF (IBB) fell more than 3%, while the SPDR S&P Biotech ETF (XBI) slid 3.5%.“Well, that party ended fast,” commented John Schroer, sector head of health care at Allianz Global Investors.
However according to Heather Bresch, Mylan CEO, it too early to make a judgement, the industry should look again at how healthcare is set up as the government repeals and replace the Affordable Care Act, adding that “We’ve got to re-look at the model” by which the industry prices drugs. (Mylan was one of the company criticized on drug pricing, aftery raising the price of EpiPen, an auto-Injectors for the emergency treatment of life-threatening allergic reactions)
Also the stock markets in Europe were affected: pan-European Stoxx 600 index sliding 0.21, percent; during the early hours Britain’s FTSE 100 traded 0.26% lower than the day before. Similar percentage declines were seen also in Germany and Paris.
A heavily-weighted with healthcare and pharma stocks such as Switzerland’s SMI index was the most affected during the first part of the trading day, falling 1.15%.
But “Things may not be as bad as they sound” as Matthew Herper from Forbes writes its article “It’s also almost certain that Trump and the Republican Congress will put through tax policies that will allow pharmaceutical companies to bring back many billions of dollars in off-shore cash they’ve been protecting from U.S. taxes.
Source: Reuters, Bloomberg, The Sreet, CNBC, Forbes