With healthcare costs continuing to skyrocket, there has been ongoing debate about how to reduce these expenses. Just recently, big pharmaceutical companies have cried foul as the government proposed new rules for pricing drugs under Medicare. But while drugmakers worry about potential losses, Wall Street appears to have a far more sanguine outlook on the issue.
Under the new federal plan, the Department of Health and Human Services (HHS) will use private sector pricing data before setting a cap on how much Medicare America seniors pay for certain drugs. The regulations are set to take effect in 2021, and are projected to reduce drug costs for elderly Americans by 35%.
Big pharma isn’t pleased with the new regulations, however. Amgen, Novartis, and other leading drugmakers have complained that the plan would require them to sell their medicines at a steep discount. As such, company executives have expressed concern that the HHS proposal could hurt their profits.
Despite the outcry from drugmakers, Wall Street seems to have taken the news in stride. Major stock indices such as the S&P 500 and Nasdaq have continued to climb even in the face of the new Medicare rules. Analysts have argued that drugmakers would need to adjust to the changing landscape, but that the long-term impact on the industry would be manageable.
At the end of the day, the HHS proposal to reign in Medicare drug costs appears to be more bluster than a serious implementation threat. With Wall Street apparently content with the status quo, the debate surrounding the new regulations will likely continue without any immediate effects on the industry.