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Research
Publication Date: 23 Jun 2020 - By Scitaris G. By Scitaris G.Thematic Technical Analysis Private Equity ETF/Funds Multi Asset Equity USA Global Biotechnology Pharmaceuticals
By Jonas Hanske, PhD, Senior Consultant at Scitaris GmbH, Berlin, Germany
The US healthcare market is the largest in the world and accounts for nearly 50% of the pharmaceuticals industry’s global revenue - therefore any public effort to control drug pricing is perceived as major threat to the industry’s earnings and thus market valuation
High list prices and increased out-of-pocket costs of brand name specialty drugs have been under scrutiny of law makers and the administration, however the industry claims that list prices are lagging behind the increase in rebates, which are not passed on to patients by insurers and pharmaceutical benefit managers
While there is a broad political consensus on the need to address the issue, the proposed approaches differ significantly with the Democrats calling for direct price regulations whereas most Republicans are opposed to any direct pricing control but rather want to alter the rebate system – bipartisan initiatives have been stalled
Initially taking a strong stance on the issue, the Trump administration has abandoned or delayed many of their proposed initiatives and likely will not make substantial progress before the elections
The upcoming 2020 Presidential Election will be decisive for the future course on drug pricing and might substantially impact the industry’s current business model
