In the national election, businessman and reality television star Donald Trump won an unexpected victory against Secretary of State Hillary Clinton to become the President-elect of the United States.
This surprise turn of events shocked much of the world and sent U.S. stock markets into a sudden nose-dive, surpassing even the crash that followed the 2001 World Trade Center attack. Then, just as quickly, the markets rallied and closed at record highs over multiple days.
Stock market jitters caused by election uncertainty is nothing new for the U.S. However, a trifecta Republican control of the government has raised hopes for numerous industries that had been preparing themselves for tighter regulations under a Clinton administration.
Drug companies, in particular, are hoping that the soft rhetoric by Trump towards them during his campaign might prove to be good news. Clinton’s campaign website laid out a much more specific set of plans for healthcare and prescription drug policy, while Trump merely offered a few casual remarks on the topics, both on his site and when speaking in public.
So, where do future uncertainties lie for the pharmaceutical industry? Here are the primary factors at play
Trump’s Views on Patents and Intellectual Property Issues
No one is completely clear where Trump stands on drug and biotech patent reform. Clinton’s presidential plan included copyright and intellectual property policy, albeit with vague language.
She did not push patent reform as part of her plan to bring down drug prices, although she did support patent reform in other areas. Trump’s plan cites the need to strengthen America’s intellectual property, but he likewise didn’t go into detail about how that relates to drug companies.
His firmest stance on intellectual property was wrapped up in his intense dislike of the Trans-Pacific Parntership (TPP), which the New York Times claimed on Thursday to have already died a quick death in post-election Congress.
Softening FDA regulations against foreign drug imports
Foreign drug import is the most specifically addressed point regarding pharmaceutical companies in Trump’s healthcare plan. Trump considers drug companies a public service, and feels that a more free-market approach will better serve consumers by providing them with more options.
This component of his plan will potentially benefit foreign drug companies by broadening their market in the United States, but is likely to cause consternation to U.S. based pharmaceutical companies who want to maintain the market share. Furthermore, opponents to this plan fear an influx of unsafe and minimally regulated drugs to the country.
Medicare and Pharmaceutical Company Price Negotiations
Trump’s formal health care plan is silent on how he plans to negotiate drug prices. However, he has said in public that he believes Medicare-negotiated discounts could save Americans $300 billion a year. This stance is in direct opposition to the traditional Republican party slant and aligns more closely to Clinton’s suggested policy.
Only time will determine if the rest of the party will back Trump’s agenda or if he will be swayed by GOP pressure and pharmaceutical lobbying in Washington.
Caps on Prices for Essential Drugs with No Competition
Clinton’s healthcare plan included steps for broadening competition for certain drugs in the attempt to keep prices down. It also detailed penalties that drug manufacturers would face in the event of perceived price-gouging.
While Trump publicly described Martin Shkreli as a spoiled brat earlier in 2015 after raising the price of Dataprim by over 5,000 percent, he has remained relatively quiet about how he plans to deal with similar situations as President. However, a Trump presidency combined with a Republican-controlled government and the defeat of California Proposition 61 has eased the price capping concern of drug companies, for the moment, at least.
Potential Repeal of Obamacare
Throughout his campaign, Trump has vehemently vowed to repeal The Affordable Care Act, also known as Obamacare, as soon as he enters office. A repeal of Obamacare has the potential to affect the pharmaceutical industry by way of trickle down.
With fewer people obtaining insurance coverage, drug companies stand to lose demand volume for prescription drugs. Despite Trump’s promises, within a few days of being elected president, he changed his tone, now suggesting he’ll keep parts of the plan.
His apparent change of heart is attributed to time he spent talking with President Obama at the White House in days following the election.
What does all of this mean?
In short, we don’t yet fully know what a Trump presidency will mean for the pharmaceutical industry. Trump’s poorly detailed healthcare and prescription drug policies, accompanied by his sometimes flip-flop decisions, leave us with only speculation.
However, as Fortune suggested, big biotech and pharmaceutical companies could benefit, at least in the short term, through increased stock valuation and cash flow from overseas.