|
 The benchmark S&P 500 index slipped into negative territory after
his remarks at a news conference spooked investors. The iShares
Nasdaq Biotech ETF dropped 4 percent at its session low and ended
down 3 percent, its largest daily percentage drop in three months.
"When the president-elect says we're going to negotiate drug
pricing, you have to take that seriously, but at the same this is a
complicated issue because there's not going to be clarity on drug
pricing reform anytime soon," said Brad Loncar, manager of the
Loncar Cancer Immunotherapy ETF. "When somebody that high profile
says something that negative, people do not want to invest in it."
Trump has blasted other industries for charging the government too
much, particularly defense companies, but has made only a few public
statements about drug pricing since being elected. He briefly
mentioned Lockheed Martin Corp, Ford Motor Co, and United
Technologies Corp during the news conference and promised a border
tax for companies producing products for U.S. consumers outside the
United States.
Back in May, then-candidate Trump said Amazon was also
"getting away with murder," referring to taxes in that case. The
stock fell as much as 4 percent in the next few days but is up
almost 12 percent since Trump's remark.
PHARMA ON EDGE
After his promise to bring down drug spending, the ARCA
pharmaceutical index gave up as much as 2.6 percent and ended the
day down 1.7 percent.
The drug industry has been on edge for two years about the potential
for more government pressure on pricing after sharp increases in the
costs of some life-saving drugs drew scrutiny in the press and among
lawmakers. The government is investigating Medicaid and Medicare
overspending on Mylan NV's <MYL.O> allergy treatment EpiPen, for
instance.
David Katz, chief investment officer at Matrix Asset Advisors in New
York, said negative comments on drug pricing trigger selling both
from algorithms and investors who suffered from share drops when
Democrat Hillary Clinton campaigned against healthcare cost
increases.
Trump's campaign platform included allowing the Medicare healthcare
program to negotiate with pharmaceutical companies, which the law
currently prohibits. He has also discussed making it easier to
import drugs at cheaper prices.
"We are going to start bidding. We are going to save billions of
dollars over time," Trump said.
Medicare, which covers more than 55 million elderly or disabled
Americans, spent $325 billion on medicines in 2015.
Industry trade group Pharmaceutical Research and Manufacturers of
America, or PhRMA President Stephen Ubl said "Medicines are
purchased in a competitive marketplace where large, sophisticated
purchasers aggressively negotiate lower prices."
[to top of second column] |
He said the industry is "committed to working with President-elect
Trump and Congress to improve American competitiveness and protect
American jobs."
Roche Pharmaceuticals CEO Daniel O'Day said in an interview at a
JPMorgan conference in San Francisco that Roche Holding AG focuses
on innovation and investing in research.
Price increases over the past several years have been "responsible"
and in the range of low to mid single digits, he said.
At the same conference, Mylan CEO Heather Bresch said it was
premature to respond to Trump's comments, when she was asked during
an investor presentation. She said the industry should look again at
how healthcare is set up as the government repeals the Affordable
Care Act.
Trump said he plans to repeal the Affordable Care Act, or Obamacare,
and replace it at about the same time. The news helped shares of
hospitals, which are nervous about losing government payments for
medical services. It hurt some health insurers, like Anthem Inc,
which sell plans on the government-run health insurance exchanges.
Healthcare ETFs including the Health Care Select Sector SPDR Fund
(XLV) and the IBB drew their highest trading volume since Nov. 10,
in the wake of Trump's election.
Trading volume in XLV options jumped to 58,248 contracts, more than
twice the average daily volume according to Reuters data.
Healthcare sector stocks were the largest drag on the S&P 500 and
the Nasdaq 100.
(Reporting by Caroline Humer, Rodrigo Campos and Lewis Krauskopf in
New York, Deena Beasley in San Francisco and Ankur Banerjee and
Natalie Grover in Bengaluru; Editing by Chizu Nomiyama and David
Gregorio)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
