Big Pharma Under Fire from Donald Trump

One of Trump’s major campaign promises was to repeal on day one.  So far, he seems on track to do so as he has the full support of Congress and they appear to be attempting to draft replacement legislation right now.  As part of the solution, Trump has taken aim at the is pharmaceutical industry, stating on Wednesday that they are “getting away with murder” in regards to the prices they are charging the government for medicine.  According to President Elect Trump, that is about to change.

His comments instantly sent the into negative territory, as pharmaceutical companies make up a significant part of the market, being an extremely profitable industry.  Over the course of the day (Wedesday, Jan 11th), the Biotech ETF (a fund widely used to invest in the industry without company specific risk, and an indicator to assess Biotech stock prices) dropped by a whopping 4% at its lowest point, eventually coming back a little bit, ending around the negative 3% mark – the largest daily drop over the last quarter.  As of right now, Trump will not be able to negotiate drug pricing as it’s currently against the law, but with Congress cracking its fingers to repeal Obamacare – drug pricing may find a place in the discussion in an attempt to create more affordable options for the American people.  Trump has also suggest making it easier to import drugs at a lower price to encourage competition, which would undoubtedly decease prices.

For the past few years, drug companies have found their backs against the wall because of pressure from the media and government over sharp increases of certain life-saving drugs.  For example, the government has been investigating and for overspending on Mylan NV’s EpiPen, and the press made a spectacle out of when his firm (Turing Pharmaceuticals) abruptly raised the prices of an AIDS drug by over 5000% (from $13.50/pill to $750/pill).  Considering those two factors, Trump won’t need to spend very much political capital to get the public on his side as he (with the help of Congress) changes the law allowing Medicare to negotiate drug prices with ‘Big Pharma’.  Public opinion of the industry is polling extremely low, so those companies are not likely to draw significant sympathy.

Reaction from upper management among these pharmaceutical companies has been mixed – some expressing their willingness to work with Trump to ‘keep jobs here in America’, and some saying it’s still too early to respond to Trump’s comments.  Many campaigns make a lot of promises that they cannot follow through on, however this promise seems to not only be feasible, but a top priority that may be first on Trump’s list of things to do.

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