Biotech is seeing red.
Just two sentences from President-elect Donald Trump on drug prices sent biotech investors into a frenzy Wednesday. Major indices like the NASDAQ Biotechnology Index and the S&P Biotech ETF fell between 3.5% and 4.5%, as did a host of major biotechs like Bluebird Bio (BLUE), Celgene (CELG), Regeneron (REGN), Biogen (BIIB), and more.
So what set of comments could have struck such intense fear in the heart of biotech investors? “I’m going to bring down drug prices,” Trump told Time in a post-election interview unveiled today, when the magazine named the president-elect its 2016 Person of the Year. “I don’t like what has happened with drug prices.”
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Trump didn’t actually offer any details on how he plans to bring prices down. But he has somewhat endorsed Medicare being able to negotiate drug prices directly in the past. He’s also previously hinted that allowing the importation of medicines from other countries may not be a bad idea.
However, with a GOP-majority Congress, it’s hard to see proposals like that, which are typically endorsed by liberals and Democrats, actually passing.
Still, the comments were enough to send the market into a tailspin, albeit one which may prove to be temporary. Some biopharma journalists and analysts had some blunt offerings on what they see as a clear investor overreaction to esoteric comments.
That said, some health care stocks (including biopharma ones) spiked considerably immediately following Trump’s election win, with many investors predicting that Trump wouldn’t come down nearly as hard on the industry as his bested Democratic opponent Hillary Clinton.
Some pharma CEOs have warned that drug pricing isn’t going away as a major issue any time soon, and that believing otherwise amounts to wishful thinking. Last week, Allergan (AGN) CEO Brent Saunders said that drug makers should begin moderating their prices before broader government action takes the decision out of their hands. And a second pharma giant, Novo Nordisk (NVO), also recently pledged to voluntarily limit future price increases to single digits.