Bipartisan support for combatting the rising cost of prescription drugs has challenged the pharmaceutical industry.

Health care stocks drop after Trump criticizes drug industry

By Rachel Newman

Health care stocks tumbled Wednesday after President-elect Donald Trump unexpectedly slammed the pharmaceutical industry in his first press conference since Election Day.

North Chicago-based AbbVie Inc. was down 3.61 percent at the close of stock trading Wednesday, while the NASDAQ Biotechnology Index fell 2.96 percent, up from its low point of 3.79 percent after Trump’s press conference.

“Our drug industry has been disastrous. They’re leaving left and right. They supply our drugs, but they don’t make them here to a large extent,” Trump said.

Several large U.S. drug companies have attempted mergers that would move their headquarters overseas to countries with lower corporate tax rates. Teva Pharmaceuticals Ltd. completed a merger with the Irish drug maker Allergan PLC’s generics company, Actavis Generics, in August.

Drug manufacturing giant Pfizer Inc. attempted a $152 billion merger with Allergan, but new Treasury Department regulations caused them to abandon the deal in April.

Chart illustrating the NASDAQ Biotechnology Index on January 11, 2017 (Rachel Newman/MEDILL)
Chart illustrating the NASDAQ Biotechnology Index on January 11, 2017 (Rachel Newman/MEDILL)

The President-elect added that drug makers are “getting away with murder” due to powerful lobbying efforts that result in American consumers paying more than consumers in other countries for the same prescription drugs.

Combatting skyrocketing prescription drug costs was a key campaign issue for Democratic presidential nominee Hillary Clinton. The former Secretary of State’s platform included ending direct-to-consumer advertising from drug companies, allowing consumers to re-import personal supplies of prescription drugs, and allowing Medicare to negotiate drug costs.

Her unexpected defeat was considered a boon for the drug industry. The NASDAQ Biotechnology Index jumped 8.9 percent on the Wednesday following Election Day.

“The most severe pricing fears for the [pharmaceutical industry] have receded following the election although President-elected Trump’s stance towards the industry remains an unknown, and we expect the debate on pricing to continue,” said Chris Schott, an analyst for J.P. Morgan in a December research note regarding the 2017 outlook for the pharmaceutical industry.

Schott could not be reached for comment by press time.

Though Trump has been unclear on his plan to combat rising prescription drug costs, he did speak in favor of allowing Medicare to negotiate at a January 2016 campaign event in New Hampshire.

Wednesday’s press conference comes amid conflict-of-interest allegations directed at Rep. Tom Price, R-Ga., Trump’s pick to head the Department of Health and Human Services.

Price has bought and sold stock in 40 health care, pharmaceutical and biomedical companies, including Pfizer Inc., Eli Lilly & Co., and Bristol Myers Squibb Co., since 2012, the Wall Street Journal reported in December.

Price’s trading raises questions about whether or not the Trump appointee violated the Stop Trading on Congressional Knowledge (STOCK) Act, a 2012 law that bars members of Congress and their staff from using “any nonpublic information” for personal financial gain.

Photo at top: Bipartisan support for combatting the rising cost of prescription drugs has challenged the pharmaceutical industry. (Images_of_Money via Flickr)