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Pharma stocks in red over possible US policy change this week

US President Donald Trump’s policy is likely to focus on the high drug prices in the US as well as expanding scope of the insurance companies to negotiate the prices.

US President Donald Trump will outline new policies this week in line with his pledge of bringing down drug prices. Alex Azar, the secretary for Health and Human Services, said last week that ‘the entire system is under review’.

Alex Azar’s comments are in sync with Trump’s earlier comments on high drug prices in the US. Trump’s policy announcement this week, in this context, has given rise to the speculation that healthcare and pharma companies are likely to get hit by new US healthcare policies.

The pharmacy benefit managers (PBM) have also come under pressure. The PBMs are alleged to not pass on the discounts/rebates on dug prices from pharma companies to the customers. These discounts have led to the patients paying higher out-of-pocket drug costs.

Additionally, the USFDA Commissioner Scott Gottlieb has also been vocal about these rebates and has been suggesting that the administration should change the law and let the discount be passed to the patients fully or partially.

Alex Azar has reportedly said that the new proposal will take aim at high list prices on drugs, as well as expanding the Medicare program’s ability to negotiate prices on more drugs under Medicare Part D drug plans.

The US policy on healthcare/drugs will be keenly watched by the market and Indian pharma stocks, which have US focus may remain under pressure in this week.

Most pharma stocks have turned red due to this development. Lupin, Alkem are trading down 2.5% each, while Dr. Reddy’s lab is down 1.7% and Sun Pharma and Cipla are down more than 0.7% each.

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