Pharma stocks dive on Trump price-bid threat

Biotechnology & Life Sciences Index was down 1.8 per cent.

Investors had been betting Trump would be good for the industry — drug and biotech stocks had gained since his election — but it now appears the Republican may take up the banner Democrats carried during the campaign and lock on drug prices as an issue that hits many Americans in their wallets.

Democrats have supported having Medicare, which covers the elderly and disabled, negotiate prices directly on behalf of patients, while defending against such a program has been a priority for the drug lobby in Washington. Medicare is the biggest purchaser of drugs and medical services in the country.

“It’s a policy we ought to consider,” House Minority Whip Steny Hoyer, a Democrat from Maryland, told reporters Wednesday. “But as you know, Republicans have not been open to that consideration.”

Senator Bernie Sanders, a Vermont Independent, tweeted that Trump is right about the pharmaceutical industry getting away with murder. “But do Trump and Republicans have the guts to police drug companies and lower prices?” he asked.

The Senate plans a test on the issue this week. The chamber will likely vote on an amendment to the 2017 budget resolution backing the government’s ability to negotiate drug prices on behalf of Medicare. The amendment, from Sen. Amy Klobuchar, a Democrat from Minnesota, is meant to see where senators stand.

The U.S. doesn’t directly regulate medicine prices, unlike much of the rest of the globe. President Barack Obama proposed letting Medicare negotiate prices for biologics and other expensive drugs. The government is specifically prohibited from negotiating prices with drugmakers in Medicare’s drugbenefit program.

Trump’s nominee to lead the Department of Health and Human Services, Rep. Tom Price, a Georgia Republican, has opposed Medicare drug-price negotiation efforts in the past. He’ll likely be asked about the issue during Senate committee hearings on his nomination. The Senate health panel’s hearing is scheduled for Jan. 18, while the Senate Finance Committee, the only one that will vote on his nomination, has nothing on the calendar yet.

Heather Bresch, chief executive of Mylan NV, took a measured approach to Trump’s call for price bidding.

“It would be premature to respond to any one thing” that Trump said, she told attendees at the J.P. Morgan Healthcare Conference in San Francisco. Mylan is mainly a generic drug company that also sells the EpiPen, maligned by Congress last year for substantial price increases. “The pricing model has got to change. I know that scares a lot of people. If anyone is walking away from the conference, thinking business as usual, that’s a mistake.”

The Biotechnology Innovation Organization, the lobby group for the biotech drug industry, said in a statement it is “eager” to work with all parties to ensure patients have access to the drugs they need and America remains the leader in the development of new treatments.

During his press conference, Trump also promised to get drugmakers — many of which have moved their legal addresses abroad to save on taxes — to return to the U.S.

“Our drug industry has been disastrous, they’re leaving left and right,” Trump said. “They supply our drugs but they don’t make them here, to a large extent.”

He also said Obamacare should be repealed and replaced “essentially simultaneously.”

Republican leadership in Congress has been considering a plan to repeal Obamacare by next month and work on a plan to replace it later.