TrumpCare, Making it Happen Now
$JNJ, $MRK, $MCK
US President Donald Trump jumped back into the debate over drug pricing Tuesday, sending pharmaceutical stocks down again with a Tweet promising to lower medicine costs for American people.
In a tweet shortly before 9:00a New York time Trump said he’s working on a “new system where there will be competition in the drug industry.”
US President Donald Trump Sends Pharma Stocks Down With New Tweet on Drug Prices
I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!
— Donald J. Trump (@realDonaldTrump) March 7, 2017
The White House did not immediately respond to a request to clarify the Tweet.
Mylan NV, the maker of the EpiPen allergy shot that was at the center of the public outrage over drug prices last year, declined 1.9% to 43.21 at 11:05a in New York, while Perrigo Co. dropped 2.5% and Allergan Plc fell 1.7%.
President Trump sent his tweet the morning after House Republicans unveiled their long-awaited legislation to repeal and replace the Affordable Care Act aka Barack Obamacare late Monday saying that competition will come later in the health-care rollout.
The 25-member Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index dropped as much as 1.3%, the most since 11 January, when President Trump said the pharmaceutical industry is “ getting away with murder.” The president has promised to lower drug costs multiple times — and threatened to use the government’s buying power to force prices down — but so far has not unveiled any specifics about how to do so.
The Tuesday Tweet has industry analysts struggling to figure out what the President means, especially because has has alluded to bidding in the past. Unlike most countries in the world, the US does not directly regulate medicine prices, and drugmakers have strongly resisted it.
Medicare Part D, the prescription drug part of the government program for the elderly, already includes multiple formulary tiers with branded drugs that are interchangeable, meaning they can generally compete against each other. That’s not the case for Medicare Part B, which covers doctor visits, outpatient treatments and lab tests.
Lowering co-payments is a short-term possible way of lowering drug costs, according to a Credit Suisse analyst in a note Tuesday. He wrote he’s unclear how Part D could be reformed since pharmacy benefit managers — middlemen who negotiate drug prices in secret — already providing “some competition.” There could be some potential changes to Part B policies, he said.
Drugmakers are under intense pressure to come up with ways to reduce prices amid outcry from members of Congress and U.S. customers. Some companies, including Allergan and Swiss giant Novartis AG, have responded with voluntary actions to cap price increases. Johnson & Johnson (NYSE:JNJ) and Merck & Co. (NYSE:MRK) have taken steps to increase transparency about their prices.
No sector of the drug industry was spared Tuesday.
Drug wholesalers also fell, with McKesson Corp. (NYSE:MCK) down 1.3 percent, Cardinal Health Inc. dropping 0.4%, and AmerisourceBergen Corp. declining 0.7%.
President Trump met with top industry executives in January, and his comments to the media suggested backing off a worst-case scenario where the US government would set drug prices.
The industry’s lobbying group has started a media campaign to highlight the science behind its medicines. It has also been joined by drugmakers in pushing outcome-based pricing programs, which is when companies refund some of the money to insurers if a medicine doesn’t work as expected.