President Trump rarely received a standing ovation from the entirety of the audience at his first State of the Union address. One of the rare moments came when he spoke about knocking down America’s outrageous drug prices.
“One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities. Prices will come down.”
Many are skeptical of his declaration, especially since he mentioned combatting high drug prices during his campaign and no action took place in 2017.
There’s some hope this time will be different. Not only did President Trump mention drug prices in his State of the Union, but just one day prior, President Trump put in place a new Health and Human Services Secretary (Alex Azar) and charged him with finding a solution to bringing prescription prices down. At the swearing in Trump stated, “He’s going to get those prescription drug prices way down.”
Should you believe 2018 President Trump? Well, one of our most nonpartisan barometers of future action seems to believe him.
Upon market-close the day after the State of the Union, pharmaceutical stocks were smashed.
Some of the larger producers of medical drugs were hit hard:
Merck & Co. (ticker: MRK) lost 2.31% or about $3.8 billion off its market cap.
Amgen Inc. (ticker: AMGN), dropped 2.73% or about $3.8 billion.
AbbVie Inc. (ticker: ABBV), fell 3.16% or about A$5.8 billion.
Mylan NV (ticker: MYL) lost 2.66% or about $644 million.
Gilead Sciences Inc. (ticker: GILD) sunk 4% or about $4.6 billion.
Bristol-Myers Squibb Co. (ticker: BMY) was hit for 2.13% or about $2.2 billion.
The total market cap lost by the companies above comes out to $20.8 billion. That’s a lot of money that fled pharmaceuticals, and there’s nothing partisan about the decisions behind making or losing money in the markets. The markets are betting President Trump’s words turn into actions.
Now we just have to wait and see if the markets bet correctly.