What does the US Presidential election mean for health investors?

By
Nicole Jeary
-
Biotech
What does the next US administration mean for Biotech?

 

Never in modern US history have two presidential candidates been so vehemently opposed. However a rare caveat of policy on which both candidates agree is that of rising drug prices, which they both believe must be comprehensively addressed.

Luckily, it’s also a popular stance with the public. According to a Kaiser Family Foundation poll, over 80 percent of Americans support the government being able to negotiate drug prices for Medicare beneficiaries, including 68 percent of Republicans.

As a consequence, the predominant fear among drug makers and the Biotech industry is that the next President will constrain pricing, which may prove detrimental to the returns on research investments.

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Donald Trump’s stance

Like most of his other policy stances, Trump’s has failed to clarify the specifics of how he intends to combat rising drug costs in the US.

However in January Mr. Trump openly criticised health companies for exploiting government run mechanisms, and accused them of profiting from the high price of life-saving drugs. Mr Trump said at a rally that Medicare could “save $300 billion” a year by getting discounts as the biggest buyer of prescription drugs.

Trump added: “We don’t do it. Why? Because of the drug companies.”

Whilst Trump has since remained characteristically vague on the issue, the businessman-turned-politician potentially has more freedom to enact restrictions and leverage over pharmaceutical giants than Clinton. Ultimately, Trump and the committees supporting him have received considerably less funding from health industry lobbying groups — just $110,000. In comparison, Clinton’s campaign accepted more than $13 million.

Hillary Clinton’s stance

Health investors remain concerned about what a Clinton presidency may mean for pharmaceutical stocks. With recent poll numbers indicating the growing likelihood of a Clinton presidency come November, this fear has become more of a legitimate concern.

Whilst Twitter tactics are more often associated with Trump’s campaign, Clinton’s tweets have proved troublesome for the industry. Earlier in the year, stocks in biotech firm giant Mylan inc plunged by 5.4 percent following a tweet from the presidential candidate.

 

Previously, another similar tweet from Clinton led to the Nasdaq Biotech Index (NBI) plunging down by 4.7 percent in one day in September 2015.
Indeed, Clinton’s plans are much more detailed than her opponent on her policy intentions. Thus far, these have included the limiting of out-of-pocket spending to $250 a month, allowing Medicare to negotiate with drug manufacturers and penalising companies that raise old medication prices in the US.
Clinton has outlined a plan on her campaign website to deal with price surges in health care. The plan specifically addresses “lifesaving treatments that have long been on the market.” It will “establish dedicated consumer oversight at our public health and competition agencies,” which will calculate an outlier price increase based upon on clear indicators. These are to include a trajectory of the proposed price increase, cost of production and “the relative value to patients.”