Healthcare stocks and top healthcare ETFs rallied Friday after President Donald Trump vowed to end to “global freeloading” that has allowed foreign countries to pay less on American-manufactured medicines.
The Health Care Select Sector SPDR (NYSEArca: XLV), the largest healthcare exchange traded fund, gained 1.5% Friday while the iShares Nasdaq Biotechnology ETF (NASDAQGM: IBB), the largest biotech exchange traded fund by assets, rose 2.7% and VanEck Vectors Generic Drugs ETF (NasdaqGM: GNRX), which focuses on generic drug producers, added 2.2%.
Among the best performers on Friday, the ALPS Medical Breakthroughs ETF (NYSEArca: SBIO) gained 3.0%, PowerShares Dynamic Pharmaceuticals Portfolio (NYSEArca: PJP) increased 2.9% and SPDR S&P Biotech ETF (NYSEArca: XBI) climbed 2.9%.
Adding to the momentum in the healthcare sector, President Trump unveiled his administration’s plan to lower prescription drug prices and pledged to end global freeloading that has allowed foreign buyers to pay less for drugs, Fox reports.
“America will not be cheated any longer, and especially will not be cheated by foreign countries,” Trump said Friday in a Rose Garden address.
Michael Cohick, ETF product manager at VanEck, told ETF Trends the news supported its original premise regarding the space.
“We see the generic drug segment of the larger pharmaceutical industry as a growing and distinct opportunity set that investors can access using our ETF,” Cohick said.
Related: Tech Advances Could Help Healthcare ETFs Grow
Trump argued that Americans, through higher drug prices at home, are basically subsidizing the “enormous cost of research and development” for the benefit of other countries, which are able to acquire the same drugs for cheap.
“In some cases, medicine that costs a few dollars in a foreign country costs hundreds of dollars in America for the same pill, with the same ingredients, in the same package, made in the same plant,” Trump said. “That is unacceptable.”
“It’s unfair. It’s ridiculous. It’s not going to happen any longer. It’s time to end the global freeloading once and for all,” the President added.
Trump’s “American Patients First” Plans
Trump’s “American Patients First” plans also include several tactics for lowering notoriously high drug prices in the U.S., such as increasing competition, creating incentives for drugmakers to lower initial prices and reducing federal rules that make it harder for private insurers to negotiate lower prices.
“Americans should be able to reap the rewards of living in the country that has brought the world more new drugs than any other,” HHS Secretary Alex Azar, Food and Drug Administration Commissioner Scott Gottlieb and Centers for Medicare & Medicaid Services Administrator Seema Verma said on Fox.
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