Pelosi Drug Pricing Plan Puts Big Pharma In 2020 Election Hot Seat

The new drug pricing plan from House Speaker Nancy Pelosi is Big Pharma’s worst nightmare. The bill would give the government power to negotiate prices for the 250 prescription drugs that cost Medicare the most. All consumers would benefit — not just Medicare beneficiaries. Customers in the U.S., known for its high drug prices, would have to pay no more than people in other countries where governments negotiate prices. The legislation is surely dead on arrival. Yet that’s small consolation for drugmakers. They just became central to Democrats’ 2020 election strategy.


Several Big Pharma stocks, including Dow Jones drug giant Merck (MRK), biotech leader Amgen (AMGN) and insulin-maker Novo Nordisk (NVO) were notable losers in Tuesday’s stock market trading, while drug wholesalers McKesson (MCK) and AmerisourceBergen (ABC) also faltered.

Will GOP, Trump Act On Drug Pricing Before 2020 Election?

Pelosi has just turned up the heat on congressional Republicans and President Donald Trump to act on drug prices before the 2020 election. Senate Majority Leader Mitch McConnell may be more open to allowing a floor vote on a drug pricing bill that cleared the Senate Finance Committee. The bill, which would limit Medicare prescription prices to the rate of inflation, is nowhere near as ambitious as the Pelosi plan. Still, a majority of Republicans on the panel voted against it, and the path forward looked uncertain.

A bigger fear for Big Pharma is that Trump will act on his own to rein in drug prices for seniors. Trump has said that he’s working on a “most-favored nation” approach that also assures that Medicare Part D beneficiaries don’t pay more than in European countries. The Trump administration also has worked on a pilot program that would set some drug prices based on an index reflecting prices paid in other advanced economies.

Generally, the GOP has opposed price controls. Republicans have tended to side with Big Pharma. Both have argued that government price controls will harm private incentives to develop new cures at a high cost. Yet Trump apparently has an America First view of the issue. That’s because high drug prices for Americans essentially subsidize the cost paid in other countries.

Pelosi has met criticism from left-wing Democrats for pushing back against Medicare for All. But she won early plaudits from those same colleagues for her aggressive tack on drug pricing. This could be an issue that unites the party in 2020.

Drug Stocks Fall On Pelosi Drug Pricing Plan

Among the big drug stock losers on Tuesday, Merck stock fell 2.1% on the stock market. Novo Nordisk stock lost 2.1% as well. Both stocks also slumped Monday in anticipation of Pelosi’s bill, along with a broader shift out of stocks near highs. Yet they recovered from much deeper losses Tuesday as analysts argued that Pelosi actually hurt the chance for near-term drug pricing legislation.

Amgen stock fell 2.7% after retreating 2.6% Monday on a lackluster cancer drug trial result.

Drug wholesalers also seemed to get dragged down, with McKesson stock and AmerisourceBergen stock slipping 0.7% and 1.4%, respectively.

The Washington Post reported that Pelosi’s bill would require any makers of some 8,000 prescription medicines to cut prices or pay a penalty for any price increases above the rate of inflation dating back to 2016.


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