Thursday, September 24, 2015

Hillary's Plan to Destroy Biotechs/Big Pharma Might be Good for Express Scripts

Well Hillary dropped a bombshell on the Health Care Industry earlier this week.

Hillary Clinton made waves this week when she announced her strategy for reining in sky-high drug prices. The strategy, which includes a mix of reforms designed to prod drugmakers to reimagine pricing, led to a significant sell-off in biopharma, lopping an estimated $40 billion in value off the industry on Monday alone, according to Bloomberg.
One beneficiary would be Express Scripts because of this logic.

Clinton's plan aims to cap patient out-of-pocket spending at $250 per month, or $3,000 per year, and that could jeopardize margins at health insurers if they have to make up for any shortfall.

A squeezing of biopharma and insurance companies could end up being good news for Express Scripts, a pharmacy benefit manager.

Express Scripts contracts with health insurers and other payers to manage their drug programs, and its services include negotiating prices with drugmakers, boosting the use of generic drugs, helping patients take their medicine as prescribed to avoid costly hospitalizations, and analyzing data to find drug-related cost-savings.
This would also be a tailwind for United Health Group who bought out PBM Catamaran a while back. Rite-Aide bought out Envision Rx and Aetna could create their own PBM as well. This article also says that Express Scripts could be bought out by Walgreens Boots Alliance so they can have their own PBM shop as well. The buyout would have to be pretty large because of ESRXs $55 billion market cap. They might need to pull the trigger quickly as well because I'm sure if Hillary wins they would block this buyout for sure.

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