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Published: Sat, January 14, 2017
Economy | By Melissa Porter

Pharma stocks plunge after Trump's attack on drug pricing

Pharma stocks plunge after Trump's attack on drug pricing

At his first press conference as president-elect, Donald Trump said that he would change the way the country bids on drugs to bring spending and prices down. Trump has the added burden of actually having to deliver on reducing drug prices before he gets those kinds of cheers, but at least he can count on his efforts to do so being very popular along the way. "It's not incremental change.I think it's truly rethinking the business model", said Heather Bresch, chief of EpiPen maker Mylan Pharmaceuticals, speaking at a Bay Area biotech conference today.

Republicans have said that the process of repealing Obamacare could take months, and developing a replacement plan could take longer.

It was not clear if, by "get our drug industry back", he was calling for the end of tax-inversion mergers that move the headquarters of American companies overseas for tax purposes. "We are going to save billions of dollars over time", Trump told the journalists. "I think he will be focussing on introducing new pricing models that will make expensive innovator drugs more affordable, considering that the generics are priced at nearly one-tenth of the branded drugs" Medicare, the largest single U.S. payer for prescription drugs, is by law unable to negotiate pricing.

"Our drug industry has been disastrous".

"Pharma has a lot of lobbies, a lot of lobbyists and a lot of power", Trump added at his January 11 press conference, reports NY magazine. "They don't make them here for a large extent".

Other executives were still adjusting to their new reality, wishing they could just be left alone by the new president. And there is very little bidding on drugs. It is estimated the government could save up to $16 billion annually if it simply was allowed to negotiate with companies for the prices. Mr Gorakssakar expects the upside in companies like Sun Pharma, Dr Reddy's and Lupin, which have large exposure to the USA, to be capped in the near term. In the drug industry, led by Pfizer, the money did not go to support new jobs, however. And the iShares Nasdaq Biotechnology ETF (IBB), which owns many of these companies fell 3% too. Klobuchar also proposed an amendment backing the government's ability to negotiate drug prices on behalf of Medicare but a vote wasn't taken on the measure. "Usually you come to San Francisco for this meeting, and there is lots of chatter about potential deals, and you aren't seeing that", he said.

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