What a Trump win means for pharma
- In the early hours of November 9, commentators called the U.S. Presidential election in favor of Republican Donald Trump, an unexpected turn of events that some are calling a nightmare scenario.
- Yet Trump's victory propelled biotech and pharma stocks sharply higher as investors put worries of a crackdown on drug pricing under Hillary Clinton behind them.
- The Nasdaq Biotechnology Index (NBI) rose by 10% from the close on Nov. 8 through the following Friday, while the SPDR S&P Biotech ETF (XBI) climbed nearly 15% over the same period.
Healthcare took a relatively backseat position in the U.S. Presidential election in 2016, overshadowed by much of the non-issue related circus of the season.
While neither candidate offered much for pharma to be excited about, Democratic nominee Hillary Clinton had offered a plan to combat drug pricing and Trump had shown some agreement that the pricing issue is a problem.
The main healthcare focus for Trump has been the Affordable Care Act, which he has vowed to repeal once he takes office. Pundits speculate it might not be struck down so easily if Democrats in Congress are unwilling to fall in line.
With few details about his healthcare plans, it's hard to say what it means for pharma in the longer-term, but repealing the ACA would in theory be a negative since the law connected previously uninsured patients with pharma's drugs.
Yet, Jefferies analyst Jeffrey Holford wrote in an election day note that the striking down of Obamacare is "unlikely to be significant."
"Of the [approximately 36 million] previously uninsured in 2014, relatively few have signed up under Obamacare. Furthermore, given the significantly higher rebates paid under Medicaid, any incremental sales lost would be modest and carry a relatively low margin," he wrote.
Trump's administration could push for change at the Food and Drug Administration, hinting at reforms in a vaguely worded platform promise on Trump's transition website. Trump will act to "reform the Food and Drug Administration, to put greater focus on the need of patients for new and innovative medical products," the website says.
While Trump has made some comments aimed at the pharma industry, the general consensus so far is Republican-controlled executive and legislative branches will likely be broadly more friendly to the sector.
- The New Yorker An American Tragedy
- Bloomberg Anxious World Confronts the Reality of Trump as U.S. President
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