Healthcare stocks, especially the biotech segment, and related exchange traded funds plunged Wednesday after President-elect Donald Trump singled out the rising drug prices at a press conference.
The healthcare sector was the worst performing area of the equities market on Wednesday, with the Health Care Select Sector SPDR (NYSEArca: XLV) down 1.3%.
Meanwhile, biotech-related ETFs led the retreat downward, with the PowerShares Dynamic Biotech & Genome (NYSEArca:PBE) down 4.2%, ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) down 4.5% and BioShares Biotechnology Clinical Trials Fund (NasdaqGM: BBC) down 4.3%.
On Wednesday, Trump said he will force the pharmaceutical and biotechnology industries to bid for government businesses in order to help save consumers billions of dollars, Bloomberg reports.
“They are getting away with murder. Pharma has a lot of lobbyists and a lot of power and there is very little bidding,” Trump said at a press conference in New York. “We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.”
The drug industry had previously been strengthening on hopes that Trump would be more business friendly toward the sector, but it appears that the President-elect is taking up the same mantra that the Democrats espoused during the campaign trail as he focused on high drug prices, a populist issue that has weighed on many American consumers.
The U.S. does not directly regulate the price of medicines. President Barack Obama previously proposed allowing the U.S. Medicare program to negotiate prices for biologics – manufactured organic molecules – and other expensive drugs. The government is currently prohibited from negotiating prices with drugmakers in the Medicare program.
The Senate is planning to test support for such a change this week, with the chamber voting on an amendment to the 2017 budget resolution that backs the government’s ability to negotiate drug prices on behalf of Medicare.
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