Presidential Election Vote 2016 in USA with flag  Torn Paper Background
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President elect Donald Trump is not even in the white house yet but as a result of his win, stock prices for pharmaceutical and biotech companies increased but hospital and health insurers have seen their stock prices go down.  The healthcare industry showed one of the biggest gains following Trump’s win. The Stoxx 600 healthcare index in Europe went up by 3.5 percent within a few hours. Shares for other major drug makers including Novartis, Roche, GlaxoSmithKline and AstraZeneca all increased by 2 to 4.5 percent.

There is talk that a Trump presidency may go easy on high drug prices which has been an issue in recent years. This positive vibe may also be a reason why healthcare companies have been more buoyant in both Europe and U.S. and why share prices have surged.  Hillary Clinton had been vocal about drug pricing and her defeat may be viewed as a positive for healthcare companies. Clinton had indicated action on price gouging, which sent drug stocks into a tailspin in September 2015. Things seem to be on a different track now as far as the pharmaceutical companies are concerned. Novo Nordisk, the Danish insulin maker has come under severe criticism recently because of the high prices of its diabetes drugs. The company saw large gains up to 6 percent with Trump’s election, clearly indicating that companies following a high-pricing strategy are feeling positive about a Trump presidency.

Some experts believe that Trump’s lack of “proposed action” on high drug prices may be short-term and that the future may not be as rosy for the healthcare industry as some are predicting. Marie Owens-Thomsen, Chief Economist at Indosuez Wealth Management has pointed out that during his campaign, Trump has said several things that could potentially be harmful for the industry. Trump has talked about importing cheaper drugs, greater scrutiny on drug prices and price negotiation as possible measures during his tenure.

If one evaluates the campaign period, it is evident that Trump had less support from the pharma industry as compared to Hillary Clinton. Clinton collected approximately $336,416 in donations. Trump on the other hand, received the fewest donations from pharmaceutical companies. While Clinton may have had her issues with the pharma industry, Trump may not be their go-to-guy either. The Trump website talks about several possible measures that his administration may undertake including repealing Obamacare, creating competition by allowing health insurance to be sold across state lines; allowing individual health insurance premium payment deductions; Health Savings Accounts; price transparency; block-grant Medicaid to states; and lower barriers to entry for cheaper drug providers.

“Drug re-importation isn’t exclusively a Democratic idea,” says David Nather of STAT, noting its support from John McCain in 2008, “But it’s not an idea that wins the votes of most Republican lawmakers, and it is bitterly opposed by the pharmaceutical industry.”

Some experts believe that Trump’s lack of “proposed action” on high drug prices may be short-term and that the future may not be as rosy for the healthcare industry as some are predicting. Marie Owens-Thomsen, Chief Economist at Indosuez Wealth Management has pointed out that during his campaign, Trump has said several things that could potentially be harmful for the industry. Trump has talked about importing cheaper drugs, greater scrutiny on drug prices and price negotiation as possible measures during his tenure.

If one evaluates the campaign period, it is evident that Trump had less support from the pharma industry as compared to Hillary Clinton. Clinton collected approximately $336,416 in donations. Trump on the other hand, received the fewest donations from pharmaceutical companies. While Clinton may have had her issues with the pharma industry, Trump may not be their go-to-guy either. The Trump website talks about several possible measures that his administration may undertake including repealing Obamacare, creating competition by allowing health insurance to be sold across state lines; allowing individual health insurance premium payment deductions; Health Savings Accounts; price transparency; block-grant Medicaid to states; and lower barriers to entry for cheaper drug providers.

“Drug re-importation isn’t exclusively a Democratic idea,” says David Nather of STAT, noting its support from John McCain in 2008, “But it’s not an idea that wins the votes of most Republican lawmakers, and it is bitterly opposed by the pharmaceutical industry.”

On the other hand, Benjamin Isgur of PwC Health Research Institute seems to have more faith in the strength of the pharmaceutical industry. He states, “These health organizations are like large ships, and you can’t turn them on a dime. I think what the industry is concerned about is a partial repeal that takes away customers and doesn’t replace them with anyone.”

Trump made it very clear that if elected, he would repeal the Affordable Care Act (ACT) implemented by President Barack Obama. According to Trump, the ACA is a major “economic burden” on the American people and that the only good strategy would be to repeal Obamacare completely. This step could potentially lead to the end of the expansion of Medicaid. An important thing to note is that over 65 percent of healthcare leaders oppose this step and are not in favor of repealing the ACA. Only 2 to 3 percent of the respondents supported Trump’s proposed reforms to healthcare in America.

Any changes Trump brings to the ACA could also slow down progress on healthcare IT initiatives. During the Obamacare period, several health information technology companies had ramped up but with Trump’s proposed reforms, their future does not look very bright. Already, healthcare organizations are dealing with an increase in ransomware, cybercrime and hacking and have to deal with budget cuts and administrative issues. Dealing with an overhaul of Medicaid and insurance issues may just be the last straw for hospital managers.

In addition, the ACA also benefited other stakeholders within the healthcare industry. More people bought insurance and people had better access to both medical care and drugs. All this is likely to change.

Another possible consequence of a Trump presidency could be changes in the FDA. Trump has always been vocal about curtailing too much regulation. During his recent announcement of his First 100 Day Action Plan, Trump talks about possible reforms targeted toward cutting down the red tape at the FDA in order to speed up drug approvals. While this may be good for some drugs, it may also result in the FDA being forced to reduce its scrutiny of new drugs, faster approvals of generic rugs and increasing the risk of low-quality medicines being made available to consumers without adequate data to back their safety and effectiveness.

Overall, it is evident that Trump’s election has had a mixed impact on the pharmaceutical industry. While initially stock prices increased for most of the major pharmaceutical companies, the insurance sector has not seen the same positive impact. That is mainly because of the confusion and apprehension related to Trump’s plans for Obamacare and Medicaid. In addition, the threat of generic drugs and the possibility that Trump could make it easier for drugs to get approved and for cheaper companies to enter the market could mean trouble for the big players who spend a large percentage of their budgets on Research and Development and use drug prices as a possible source of return on their investment.

Only time will tell how the changes will affect the pharmaceutical industry once the president elect takes on the White House. The possible repealing of some or all of the ACA, pharmaceutical companies may be held more accountable for drug prices, cheaper alternatives may be more readily available to consumers thus affecting sales of the more expensive products and the FDA may be put under pressure to reduce its standards for drug approvals.

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