Stock Strategist: Implementation of Trump's Drug-Pricing Orders Unlikely

[Morningstar Logo]( [Company Site]( [Company News]( [Membership]( [Portfolio]( [Stocks]( [Options]( [Funds]( [ETFs]( [Markets]( [Tools]( [Personal Finance]( [Discuss]( Stock Strategist Implementation of Trump's Drug-Pricing Orders Unlikely We don't foresee any impact on pharma companies' moats or valuations. [tab_bar] by Damien Conover, CFA | 11/25/2020 2:30:00 PM President Donald Trump issued several orders on Nov. 20 designed to lower U.S. drug prices. We don’t expect implementation of these orders, however, given legal challenges, lack of support from the U.S. Congress and the incoming Biden administration, and unclear financial impacts. As a result, we don’t expect any major impact on the U.S. pricing power of drugs, a core pillar of our economic moat ratings and valuations in the drug industry. One of the White House directives focused on pricing 50 of the largest Medicare B (hospital-administered) drugs at the lowest levels paid by developed countries. This would significantly affect U.S. prices, as we estimate drug pricing in the United States is close to double the prices in developed markets. However, we expect valid industry legal challenges to stop this order. The order doesn’t appear to have followed the normal legal process and instead was rushed out so Trump could enact the policy before leaving office. Additionally, we believe the rule is difficult to implement without legislative support from Congress. Further, we don’t expect the Biden administration to focus initially on U.S. drug pricing, especially in the form of these recent proposals, which lack full legal and congressional support. To read more, click [here](. Sponsored Links [Buy a Link Now]( Podcast: Investing Insights From Morningstar.com Listen to a roundup of the latest videos featured on Morningstar.com [in this podcast]( available through iTunes. Free Issue | Morningstar's Stock Newsletter >> Morningstar StockInvestor is celebrating more than 10 successful years of high-quality stock investing. Its two real-money portfolios have outperformed the S&P 500 since 2001. [Get new ideas for the core of your stock portfolio.]( Search Most Recent Articles [Adley Bowden: Key Trends and Developments in Private Markets]( [Gold Is a Dull Investment]( [3 Undervalued Stocks in Berkshire's Portfolio]( Latest Analyst Reports [ConocoPhillips]( [Eni]( [Maxim Integrated Products]( [FedEx]( [WPX Energy]( ABOUT OUR EMAIL To unsubscribe and update your preferences, go to our [email newsletter page](. All subscription changes will take effect within one business day. If you have questions about Morningstar.com or your membership, send a note to premium@morningstar.com. ABOUT OUR PRIVACY POLICY Please [click here]( to learn about Morningstar's privacy policy. (c) Copyright 2020. Morningstar, Inc. 22 W. Washington Chicago, Illinois, 60602 All rights reserved.