Remember the Trump euphoria that hit biopharma stocks after the president-elect captured the Electoral College in November? Well, scratch that.
At his first press conference since July, Trump said Wednesday that the industry is “getting away with murder"—and the government needs to take action.
Trump said the government should require competitive bidding to get drug costs down, claiming that the U.S. can save "billions of dollars" with such a process. He called out pharma lobbyists and their power in Washington. And, repeating a familiar refrain, the president-elect said pharma needs to be pressured to beef up manufacturing in the U.S.
Cue the stock slump: The NASDAQ Biotechnology Index was down 3.67% early Wednesday afternoon as the press conference news broke.
Drug stocks, Biotech and pharma indexes turn lower after Trump discusses "new bidding procedures" pic.twitter.com/VUMn7rpFOR— CNBC Now (@CNBCnow) January 11, 2017
After opening the conference by talking up several recent manufacturing commitments to the U.S., Trump told reporters that the country has to “get our drug industry back. They don’t make them here for a large extent.”
The U.S. can save billions in healthcare costs by subjecting pharma to a competitive bidding process, Trump contends. “We're the largest buyer of drugs in the world and yet we don't bid properly,” he said.
“They are getting away with murder,” President-elect Trump said. “Pharma has a lot of lobbies, lobbyists and a lot of power. There is very little bidding on drugs.”
“We’re going to start bidding and we are going to save billions of dollars over a period of time.”
Trade group PhRMA’s CEO Steven Ubl said in a statement that his organization is “committed to working” with Trump and Congress “to improve American competitiveness and protect American jobs.” He said biopharma invests $70 billion each year in the U.S. in R&D, an amount higher than any other industry.
Echoing that sentiment, BIO says it is “eager to discuss ways in which all parties can work together to ensure patients have access to the medicines they need, that we do not limit treatment options available for patients and that America remains the global leader in the development of innovative new treatments and cures.”
Ultimately, we want same thing as PEOTUS 1) supportive enviro 4 innovation 2) pt access & affordability of Rx 3) smart people w good US jobs— Brent Saunders (@brentlsaunders) January 11, 2017
Trump's swift pivot to pharma came as a surprise to some amid a conference that was primarily centered around intelligence reports, the media and the president-elect's plans for his own business as he assumes the presidency.
Wednesday’s remarks are the latest in a series of drug-related statements by Trump that have kept pharma guessing. They follow more than a year of intense scrutiny and countless headlines about drugmakers’ frequent, sometimes extreme, price hikes.
At first, after Trump defeated Democratic presidential nominee Hillary Clinton, a frequent pharma critic, shares in the sector soared. But many industry leaders believed the pricing issue—and related calls for government action—wouldn’t be going away. Allergan CEO Brent Saunders, for one, suggested that peers prepare by policing themselves on drug prices.
And Trump hasn’t shied away from shaming business. He’s slammed corporations several times on Twitter, triggering share declines and bad publicity for those on the receiving end. Among the companies he’s pressed are Boeing and Lockheed Martin, and Saunders has predicted he could hop on the next pharma controversy.
Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!— Donald J. Trump (@realDonaldTrump) December 6, 2016
But if the incoming president is willing to get down to business on drug prices, Sen. Amy Klobuchar, who jumped into Mylan’s EpiPen pricing scandal early on by calling for an investigation, said she’s ready to work together. She offered several tactics in a recent USA Today editorial that she contends would help bring prices down.