What's president Trump's impact on Biotech?

[muscleman]

I don't understand why the Biotech ETF gained so much in the recent days.

 

Biotech seems to be the beneficiary of Obamacare, which forces everyone to carry an insurance, so they raised drug prices by 400-10000% and consumers don't know.

 

Now if ObamaCare is voided and competition brought in, won't that be bad for these Biotech companies?  ::)

 

[rb]

If i remember correctly Obama put some curbs specifically for biotech of just how much they can raise prices. Hillary also said some not so nice things about drug prices and drug companies too.

[DooDiligence]

I don't understand why the Biotech ETF gained so much in the recent days.

 

Biotech seems to be the beneficiary of Obamacare, which forces everyone to carry an insurance, so they raised drug prices by 400-10000% and consumers don't know.

 

Now if ObamaCare is voided and competition brought in, won't that be bad for these Biotech companies?  ::)

 

Too many variables for me to guess.

 

My rationale for owning BBH, XBI & NVO are that we've been pounding roots & such for 1000's of years & we'll continue to do so.

 

BBH gives me exposure to large cap & XBI takes care of small & mid cap.

 

I believe that the world is getting fatter & I like Novo's focus (wish it'd keep dropping so I could round out my position...)

 

I don't even factor in government intervention (it's a leap of faith...)

[Spekulatius]

BNTX and MRNA trading around 1.2x tangible book (which is mostly cash). Both have products on the market and significant pipelines. Perhaps too significant for MRNA as they may have trouble financing it, but what do I know. Seems cheap though.

 

[Lazarus]

RFK's impact on Pharma and biotech is a wild card. 

[Castanza]

On 11/22/2024 at 9:00 AM, Lazarus said:

RFK's impact on Pharma and biotech is a wild card. 

 

Not something I have a good handle on (and clearly the market doesn't either); but a basket play here might not be a bad option. 

[Spekulatius]

This will not be good for biotech and Pharma stocks:

https://www.cnn.com/2025/05/11/politics/trump-prescription-drug-prices

[dwy000]

28 minutes ago, Spekulatius said:

This will not be good for biotech and Pharma stocks:

https://www.cnn.com/2025/05/11/politics/trump-prescription-drug-prices

Good buying opportunity for when people realize you can't do this thru executive orders.  

[nsx5200]

Here's the link to the actual order:

https://www.whitehouse.gov/presidential-actions/2025/04/lowering-drug-prices-by-once-again-putting-americans-first/

 

Some initial digestion by news sources of that order:

https://www.cnbc.com/2025/05/12/trump-drug-pricing-order-most-favored-nation.html

Allsides' coverage of the same news by left, right and center:

https://www.allsides.com/story/healthcare-trump-announces-executive-order-cut-prescription-drug-prices-30-80

 

I'm not an expert in the medical payment flow, but it seems like the order calls for using the Federal Government programs (Medicare, Medicaid and associated programs like 340B Prescription) as levers to lower drug pricing for at least those programs.  @dwy000, what do you see as the major impediment to the EO?  Some items in the EO seems like wishes such as "These actions included encouraging the development of generic and biosimilar alternatives to higher cost brand name prescription drugs and biologics to harness competitive forces and increase access to affordable medicines."  A lot of the EO calls for further analysis/recommendations from the delegated agencies/secretaries, so no real concrete actions until we see the actual recommendations.

 

It does seem like the recent sudden pharma stock drop is not *yet* warranted, as you've stated, but I suspect for certain high-profile drugs like insulin, those manufactures will eventually get impacted (IMHO, rightfully so as the price differential between the US and the rest of the world is too much).

[dwy000]

34 minutes ago, nsx5200 said:

Here's the link to the actual order:

https://www.whitehouse.gov/presidential-actions/2025/04/lowering-drug-prices-by-once-again-putting-americans-first/

 

Some initial digestion by news sources of that order:

https://www.cnbc.com/2025/05/12/trump-drug-pricing-order-most-favored-nation.html

Allsides' coverage of the same news by left, right and center:

https://www.allsides.com/story/healthcare-trump-announces-executive-order-cut-prescription-drug-prices-30-80

 

I'm not an expert in the medical payment flow, but it seems like the order calls for using the Federal Government programs (Medicare, Medicaid and associated programs like 340B Prescription) as levers to lower drug pricing for at least those programs.  @dwy000, what do you see as the major impediment to the EO?  Some items in the EO seems like wishes such as "These actions included encouraging the development of generic and biosimilar alternatives to higher cost brand name prescription drugs and biologics to harness competitive forces and increase access to affordable medicines."  A lot of the EO calls for further analysis/recommendations from the delegated agencies/secretaries, so no real concrete actions until we see the actual recommendations.

 

It does seem like the recent sudden pharma stock drop is not *yet* warranted, as you've stated, but I suspect for certain high-profile drugs like insulin, those manufactures will eventually get impacted (IMHO, rightfully so as the price differential between the US and the rest of the world is too much).

Addressing the high cost of drugs has been a goal for every administration over the past 30 years.  If you could just do an EO and solve it, it would have been done decades ago.  I'd note that Biden had put in place an EO doing largely what is desired here but Trump cancelled it on his first day. 

 

The problem is that no president can set prices. Even for Medicare and Medicaid, they can't set prices they can just negotiate them. Thats pretty much what foreign countries have done using volume discounts (since most are govt run).  Almost nobody in the US pays the headline prices, those are the starting point for negotiating by insurers and CMS.

 

There are also complicating factors in that almost 90% of prescriptions in the US are already for generic drugs.  Ine of the reasons for high prices of branded drugs is that they really only have 7-9 years to recoup all research, development and testing (including for drugs that fail).  If you reduce the time or prices it has mass impact on drugs development.  There's a reason we have multiple drugs to treat nail fungus and active leg syndrome but nothing for deadly disease that affects a very small population. It's where the money is. 

 

The fact that the price reductions are voluntary tells you everything. Pharma will likely play up a 10% price drop on a small number of drugs where this was planned anyways and everyone will call it a win and move on to the next thing. 

[nsx5200]

Thank you for sharing your knowledge on this topic.