Read Trump's Lips: These Words Sent Biotech Stocks Reeling
December 8, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – Donald Trump’s comments have power to cause ripple effects across the economy. Whether it’s slamming Boeing over alleged costs over two new presidential airplanes or, more recently, sending biotech stocks on a downward turn.
Following Trump’s election in November, biotech and pharma stocks shot up as a Trump administration was not seen as likely to mandate drug pricing controls as a Hillary Clinton presidency would likely have done. But, that changed Wednesday when Trump told Time Magazine, which had just named him “Person of the Year” that he intends to bring down the price of prescription drugs. He told the magazine that he does not “like what has happened with drug prices.” As a result, shares of numerous stocks, including Valeant , AbbVie and Pfizer fell between 3 and 5 percent, CNN said. His comments sent the iShares Nasdaq Biotechnology exchange-traded fund down nearly 3 percent, CNBC said.
Trump’s statement echoed a warning that Allergan ’s Brent Saunders gave only last week. Speaking to a Forbes Health Summit, Saunders said “a Trump presidency won't magically excuse the industry from scrutiny of its pricing practices.” If Trump deems it politically expedient or necessary, he will likely turn his ire against high drug prices, Saunders said.
Saunders cited the recent EpiPen pricing scandal in his address. In his remarks, Saunders called Trump a populist president and said he would not hesitate to “jump on the next EpiPen scandal and tweet more than Hillary Clinton tweeted or anyone else…” Whenever the next drug pricing scandal arises, Saunders said Trump “will be more vicious, more focused, on taking down whoever does something again.”
It’s not like Trump hasn’t called out high drug prices before. Using Twitter as an effective tool, Trump excoriated Martin Shkreli, the former CEO of Turing Pharmaceuticals who became the poster boy for high drug prices. During the Republican primary, Trump told reporters in South Carolina hat he thought the 5,000 percent increase of Daraprim by Shkreli was disgusting and he expressed a negative opinion of Shkreli, calling him a “spoiled brat.”
While Congress has held a number of inquiries into the pricing of some drugs, particularly those from Valeant Pharmaceuticals and Turing Pharmaceuticals, the Trump administration is poised to disrupt the industry with potential changes to the Affordable Care Act. What those changes are are not yet known, but his U.S. Rep. Tim Price, a Georgia Republican, as his choice for Secretary of Health and Human Services signals a potential upheaval. Price has long been a vocal opponent of the ACA, more commonly known as Obamacare.
At least one analyst though felt Trump’s comments to Time were more bluster than an actual threat to implement price controls. Chris Meekins, research analyst on health policy at FBR Capital Markets and Co., said in a note published Wednesday that a Republican controlled Congress will not “support government regulation on drug prices,” CNBC reported. Trump has called for the federal government supported prescription programs to negotiate drug prices. He said such a maneuver could save up to $300 billion, annually.
While Trump’s comments may have been something to put the healthcare industry on notice, he has announced some plans the industry surely approves of, particularly lowering the corporate tax rate. Some industry leaders are hopeful his changes to the U.S. Tax Code will make it easier for companies to bring off-shore money back into the United States and we could be in for a resurgence of M&A activity.