President-elect Donald Trump’s expressed interest in lowering drug prices, sends shockwaves through pharmaceutical industry.
This past election was a surprise for many Americans, with widespread shock over the election of Donald Trump as the next US President.
Trump’s victory prompted TIME Magazine to name Trump its 2016 Person of the Year. Previous winners of the Person of the Year title include Mahatma Gandhi, Mark Zuckerberg, Pope Francis, and numerous presidents, including President Barack Obama, who received the title twice.
Trump’s election was groundbreaking because this was the first time in history that an individual without any political or military background was elected president, making him an excellent choice for Person of the Year, regardless of the controversy surrounding the election.
However, in the Time article, Trump created significant uncertainty after stating that he plans to combat rising drug prices, which came as a shock to pharmaceutical companies that believed Trump would not try to regulate pricing.
Only a day after the election, biotechnology stocks increased 9% in response to Hillary Clinton losing the election, according to TIME. Throughout her campaign, Clinton vowed to reduce drug costs, and go after pharmaceutical companies who were charging high prices for their drugs.
Clinton’s loss allowed the pharmaceutical industry to breathe a short-lived sigh of relief. Despite their drastic political differences, Trump revealed, for the first time, that he also supports lowering drug costs. He added that stock analysts misinterpreted his stance on the issue.
“I’m going to bring down drug prices,” Trump said in the TIME article. “I don’t like what has happened with drug prices.”
Trump did not elaborate on his comments, and there have been no specific details released that address specifically how he will accomplish this goal.
After these comments reached pharmaceutical stakeholders, stocks subsequently plummeted as a result. According to CNN, Valeant, AbbVie, and Pfizer’s stocks all dropped between 3% and 5%. Mylan, who is already under scrutiny for the recent EpiPen scandal, saw their shares decrease by 5%, while iShares Nasdaq Biotechnology ETF declined more than 4%.
Prior to the article, Trump only briefly discussed allowing drugs to be imported from other countries, which may be cheaper compared with purchasing them in the United States. He has also expressed interest in having Medicare negotiate drug costs.
Reuters reported that the biotech index fell more than 3% after the article was published, the lowest level seen since before the election.
While some pundits are doubtful that Trump could get any legislation targeting lower drug pricing to pass, others said that he may be able to prompt drug cost reform. An opinion piece from CNBC said that Trump may become successful in his efforts because he is unlike any other politician — he is a business negotiator who lacks a specific stated political ideology.
Trump has been negotiating the best deals for his businesses for decades, and it may be no different under his presidency, according to the opinion piece.
Although stocks have dropped, pharmaceutical companies may not be in jeopardy since Trump has also advocated for easing FDA regulations, which could potentially increase the amount of drugs approved, and increase profits.
These companies may also be inclined to cooperate with Trump’s plans to lower drug costs if he also backs off from any plans for manufacturing expensive drugs overseas, according to CNBC.
Even though pharmaceutical companies may have seen the benefit from Trump’s election reflected by the stock market, the TIME article has once again created market uncertainty. However, with his undeniable negotiation skills and experience, pharmaceutical manufacturers may be happy to comply with lower drug prices if regulations are eased in certain areas.