Teva slumps as Trump turns attention to generic drug prices

Teva Photo: Sivan Faraj

The US president has ordered his staff to prepare an order lowering prescription drug prices in the US.

In the 2016 US presidential campaign, it was Democratic Party candidate Hilary Clinton who aroused concern about restrictions on drug prices in the US. This pushed down the share prices of pharma sector companies on the Tel Aviv Stock Exchange (TASE), but it is now the election winner, President Donald Trump, who is taking matters a step further by advocating a reference index for drug prices, as is the practice in many European countries.

Late last week, Trump ordered US administration officeholders to prepare an order to reduce the prices paid for drugs in the US to the level of prices in countries where they are the cheapest in the world. "Why do other nations like Canada pay less than us," Trump asked rhetorically. At the same time, there are developing countries with a very low GDP, so these probably cannot be used as a reference sample. The report nevertheless resulted in tumult that dragged down share prices in the sector.

In additional bad news for the pharma sector, Democrats in Congress aiming at transparency in drug prices and lower costs for consumers are likely to support Trump's measures.

Trump tweeted on Twitter on Sunday, "Last year was the first in 51 years in which prescription drug prices actually went down, but things have been, and are being, put in place that will drive them down substantially."

Drug prices are a large expense in US health budgets. According to figures from the US Department of Health and Human Services, drugs account for 17% of the cost of the US health system. People in the US pay double or more for drugs than consumers in other countries. A 2015 Reuters survey of the 20 bestselling prescription drugs in the US found that they were an average of three times as expensive as in the UK, more expensive than in any other European market, six times as expensive as in Brazil, and 16 times as expensive as in India. Trump wants to change this.

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) share price is down 5.75% on the TASE, following a 3% drop on Wall Street yesterday. Perrigo Company (NYSE:PRGO; TASE:PRGO) is off 2.41%.

Trump's order is a further blow to battered Teva, which is facing a decline in sales of Copaxone, its former flagship drug, and two major lawsuits, involving allegedly fixing the prices of drugs and selling addictive opioids.  

Published by Globes, Israel business news - en.globes.co.il - on July 9, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Teva Photo: Sivan Faraj
Teva Photo: Sivan Faraj
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