Health-care stocks whipsawed on Friday as President Donald Trump unveiled his long-awaited plan to lower prescription drug prices, dubbed “American Patients First.”
The sector briefly turned negative before closing 1.5 percent higher. Shares of Express Scripts and CVS both hit session lows before rising 2.6 percent and 3.2 percent, respectively. Dow Jones industrial average components Merck and UnitedHealth also dipped before trading higher upon the announcement.
The proposal seeks to boost competition, improve negotiation and create incentives to lower list prices of prescription drugs and lower out-of-pocket costs for consumers. It stopped short of allowing Medicare to directly work with manufacturers on prices.
Regeneron Pharmaceuticals was the best-performing stock in the health care sector, surging 6.2 percent. The company has a cholesterol drug that costs $14,000 a year. CEO Leonard Schleifer told CNBC in March he was hopeful a deal could be struck to lower the drug’s cost.
Trump has repeatedly chastised drug companies. He’s even accused them of “getting away with murder,” spooking investors and causing pharmaceutical and biotech stocks to plunge.
“Everyone involved in the broken system — the drugmakers, insurance companies, distributions, pharmacy-benefit managers and many others — contribute to the problem,” Trump said Friday. “Government has also been part of the problem because previous leaders turned a blind eye to this incredible abuse.”
The SPDR Health Care ETF dipped briefly and then rebounded, up 1.5 percent after Trump’s speech.
Jefferies analyst Jared Holz thought the announcement lacked details.
“This was a 10-to-15 minute speech where no real details were brought forward,” Holz told CNBC. In a brief email sent to clients shortly after Trump’s announcement, he said: “Jay-Z’s Blueprint far more impactful than HHS version,” referring to Jay-Z’s hit album The Blueprint.