Healthcare is complicated

A recent NY Times op-ed piece and a corresponding Letter to the Editor talk about how importing generic drugs might lower healthcare costs in the US and stop what the op-ed writer perceives as price gouging. The op-ed position: just do it. The letter to the editor position: not so fast. Relationship status: it’s complicated. There are obvious concerns about drug safety and the US is making strides in protecting the drug supply with its track and trace efforts. That said, the letter to the editor proposed an interesting idea: “…speedily approve any sound generic drug application from a nonprofit entity for a drug whose price has risen sharply.” That’s one idea, but why just from nonprofits? Come on, people. More ideas required! Have an opinion on this? Participate in this week’s FastPoll™ below.

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Proposed US budget to cut NIH, raise FDA user fees

Well, President Trump… hey, where are you going? Don’t go yet! The President released his 2018 budget proposal. (We have saved you others’ analyses. This is the source document). Along with many other departments, the NIH may find itself wondering where 20% of its money went (go to p. 22 of the document). Also, prices are going up at the FDA. Plan on submitting a drug for approval? That might cost you double next year. InsightCity recommends you spend a few minutes in this document. It’s surprisingly readable. Also, the President and Congress have until October to come to an agreement so there’s little chance the proposal survives intact. There’s probably a better chance that the government shuts down or that pigs fly.

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1. Trump, Pharma, and the FDA walk into a bar…

Stop me if you’ve heard this one before. As the US waits to see who President Trump will select as the next FDA commissioner, there seems to be a push-me, pull-me between faster approval timelines and the rigorous, gold-standard process the FDA has had in place since 1962 (think thalidomide). On the surface, faster drug approvals should benefit the pharma industry, right? But what happens if long-term distrust of new medicines grows because faster approval times lead to ineffective or unsafe products? Wall Street hates uncertainty and the past few months have not been kind to pharma. See this chart for proof. So, buckle up and hold on.

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4. The cheap drug club

Takeda has joined the ranks of increasingly price-conscious pharmaceutical companies that have pledged to keep their drug price hikes to “reasonable” levels in the coming year (see: Allergan, AbbVie, Novo Nordisk).The Japanese-based company recently announced it would maintain single-digit price increases, and added that its pricing model has been fair for years. However, it’s probably safe to assume that the announcement has something to do with Trump’s not-so-subtle cease and desist alarms to pharma about their rising drug prices. Certainly a push for drastic measures, but consider: in the wake of a sudden call for price lowering also comes a federal push to decrease pharma regulations, cut taxes, and speed up approval timelines for drug products. Looks like industry gods taketh away, then giveth right back.

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4. It’s going to be YUGE

Election season has passed and Donald Trump is set to take office in 2017, accompanied by a newly Republican-filled Congress. This means we could be poised to witness even more of the mega-mergers that have taken place across the pharma landscape. These mergers have been popular for US companies partly because it has allowed them to achieve huge (…yuge) tax savings due to US tax rates. President-elect Trump has stated multiple times that corporate tax rates are too high and that he will be working to drop them drastically to promote competition within the US. If this comes to fruition, be prepared to see more companies bring in off-shore dollars to take advantage of these changes.

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2. For the love of power and money

With every ending comes a new beginning. Sorry for the Hallmark introduction. The US Presidential election is over and whether you wore red, wore blue or were just plain wore out, it is over. But do you know what is not over? The rally in healthcare stocks, that’s what. Regardless of whether the rally is based on past perceptions or future projections, the facts are quite interesting. Between the start of the week and the time this article was written, the Dow Jones Industrial Average is +4.2%, the iShares NASDAQ Biotechnology Index (IBB) is +13.3%, and the NYSE Pharmaceutical Index (DRG) is +5.9%. Sooooo, there’s that.

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