Another Reason Biotech's Trump-Bump Won't Last

Another Reason Biotech's Trump-Bump Won't Last December 2, 2016
By Alex Keown, Breaking News Staff

NEW YORK – It looks like the “Trump Bump” for biotech stocks is coming to an end. Shares of the Nasdaq Biotechnology Index have been sliding for the past week and are down about 7 percent from post-election highs, Bloomberg reported this morning.

Following the surprise electoral victory of Donald Trump, shares of many individual biotech stocks jumped as did the iShares Nasdaq Biotechnology exchange-traded fund. At the time, a Trump administration was not seen as likely to mandate drug pricing controls as a Hillary Clinton presidency would likely have done. However, Bloomberg reported that Brent Saunders, the chief executive officer of Allergan , told a Forbes Health Summit that “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, according to Bloomberg.

Saunders cited the recent EpiPen pricing scandal in his address. Calling Trump a populist, he warned that the president-elect is prone 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,” Bloomberg reported.

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.”

So far Trump has not been vocal about capping prices, but 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. There is also hope among industry leaders that Trump will implement changes to the U.S. Tax Code that 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.

At the end of November, Trump nominated U.S. Rep. Tim Price, a Georgia Republican, as his choice for Secretary of Health and Human Services. Price is a vocal opponent of the Affordable Care Act and will look at ways of dismantling and replacing the healthcare program more commonly known as Obamacare. Trump has pledged to repeal the program and replace it with something that gives states more control over Medicaid health plans.

While those plans to disrupt the ACA take hold, there could still be congressional support for controlling prescription drug prices. Bloomberg cited a recent Kaiser Family Foundation poll that found 77 percent of Americans believe prescription costs are too high. The individuals polled represented both major political parties and supported “fairly aggressive interventions to lower prices,” Bloomberg said.

It certainly remains to be seen what will happen under a Trump presidency, but change is likely coming, given some of the signs. Trump will be sworn in as President of the United States on Jan. 20.

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