These Numbers Prove Big Pharma Is Scared of Trump

This is a syndicated repost courtesy of Money Morning - We Make Investing Profitable. To view original, click here. Reposted with permission.

After just a little over one month in office, President Donald Trump has successfully loosened the big pharma industry’s grip on exorbitant drug price increases.

Liquidity moves markets!

Follow the money. Find the profits! 

January is traditionally the month that sees the highest list price hikes from prescription drugmakers. But on Feb. 27, The Wall Street Journal reported that pharma companies did not raise prices for as many drugs as last year and imposed fewer boosts of 10% or greater.

In fact, January saw the lowest increases of drug prices in three years, with hikes over 10% limited to just 5.5% — 15% fewer than in 2015.

The reason for the pullback: Big pharma execs are hoping to stay out of the spotlight at a time when President Trump has called for stronger Medicare authority in negotiating prices and a “total overhaul” of the healthcare system.

However, this pause on price hikes won’t last long…

Big Pharma Depends on Price Hikes

big pharma trumpProducers raised the U.S. list prices of 2,353 prescription drugs in January — about a quarter fewer than in January 2016, reported WSJ.

Industry analysts predict these producers are keeping their price boost numbers low in an effort to curb public anger and appease President Trump.

At least, for now…

The curb on price hikes is a short-term fix to a longstanding problem.

“We as an industry have used price increases to fill gaps in innovation,” the CEO of Regeneron Pharmaceuticals Inc. (Nasdaq: REGN), Leonard Schleifer, admitted at the Forbes annual health summit in November.

New Report: Grow Your Wealth Effortlessly with These Five High-Yield Stocks

You see, this fall back on price hikes has caused big pharma companies to become increasingly dependent on the practice.

“Price increases have become an industrywide practice, especially since 2010, when reliance on higher price increases for revenue growth intensified,” Goldman Sachs Group Inc. (NYSE:GS) wrote in a note to clients this past September, adding that such self-policing “has never been long-lasting.”

Moreover, this move towards self-regulation has been seen before. WSJ reported that early in the Clinton administration, amid worries over the risk of price controls, big pharma companies pledged to limit increases to the consumer inflation rate – and failed.

To date, the median drug price increase stands at around 8.9% — still far above the U.S. inflation rate of 2%.


To get full access to all Money Morning content, click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and visitors become smarter, more confident investors.

Disclaimer: © 2017 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.


The post These Numbers Prove Big Pharma Is Scared of Trump appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. I may receive promotional consideration on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Try Lee Adler's Technical Trader risk free for 90 days! Follow the money. Find the profits!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Don't want to subscribe? Support the Wall Street Examiner and get 1 or more Lee Adler's Liquidity Trader reports each month. Click the button below to see your options.

Become a Patron!