New York – Comments from Republican presidential front-runner Donald Trump that Medicare could reap huge savings by negotiating with drugmakers raise new risks for the biotech and pharmaceutical industries, whose shares have been pressured by criticism from Democrats.
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Trump told a New Hampshire crowd on Monday night that “$300 billion could be saved” by such negotiations.
“We don’t do it. Why?” Trump said. “Because of the drug companies.” Trump leads in opinion polls among Republicans vying for their party’s nomination for the Nov. 8 presidential election.
The Nasdaq Biotechnology index < .NBI> was off 0.7 percent in Tuesday afternoon trading, underperforming solid gains for the major U.S. stock indexes.
Democrats and other critics have hammered away at drug costs in recent months, raising investor concerns that future price cuts could hurt pharmaceutical and biotech companies. Biotech stocks tumbled last September after Democratic presidential front-runner Hillary Clinton tweeted her intent to tackle high prices.
“I think that Republican folks are going to have to respond, and that perpetuates the discussion,” said Les Funtleyder, healthcare portfolio manager at E Squared Asset Management in New York. “If this message resonates on the Republican side, then biopharma will have both sides shooting at it, which is not optimal for investors.”
The potential for the huge U.S. Medicare program for the elderly to use its leverage to negotiate prices has long been a proposal backed by some Democrats, and was part of Clinton’s plan to rein in drug costs unveiled last September. Medicare by law cannot directly negotiate drug prices.
Medicare’s enrollment is expected to swell to 75 million beneficiaries in 2026 from 55 million last year, the Congressional Budget Office projected on Monday.
In response to Trump’s comments, the main trade group for the pharmaceutical industry said on Tuesday that significant price negotiation already occurred with the Medicare program.
“Proposals to fundamentally alter the structure of the program could jeopardize seniors’ and people living with disabilities’ access to affordable prescription drug coverage, driving up premiums, reducing choice and restricting coverage,” said Allyson Funk, senior director of communications for the Pharmaceutical Research and Manufacturers of America.
David Heupel, a healthcare analyst with Thrivent Investment Management in Minneapolis, said he doubted the proposal would be broadly adopted by Republicans.
But should the Republicans start taking up the issue more significantly, Heupel said, it would be a “step in the wrong direction for sentiment for the group.”
It’s insulting how this article claims that lowering drug costs is a Democrat issue only and that those rich white racit repubs want to spend more money in costlier drugs.
The fact is that everyone wants lower costs, and there is negotiating room with these drug companies where they can still make huge profits. At the end of the day, Medicare needs to have these drugs available to their beneficiaries and big pharma still wants to sell their product, this will allow for the government to run iself like a business and not get ripped off which just costs us more in taxes.
Total US sales for pharmaceuticals is $377 billion. It’s clearly impossible to save $300 billion by negotiating Medicare payments. How could Trump have been successful in business without bothering to find out such elementary facts?
Trump is not going to lower our prices, He is just making noise as usual!