Biotech Investors Shouldn't Fear Legislation, Even If Hillary Is President And Dems Win Senate Majority

In a new report, Evercore ISI analyst Terry Haines discussed the potential for some form of drug pricing legislation in the U.S. within the next two years.

The SPDR S&P Biotech (ETF) XBI is down 35.3 percent in the past six months since Democratic presidential front-runner Hillary Clinton brought the issue of drug pricing to the forefront of the campaign debate.

Individual names like Gilead Sciences, Inc. GILD and Biogen Inc BIIB are getting killed on the fallout as well.

Some biotech investors are even concerned that President Obama could push for some type of drug pricing law in his last year in office, but Haines sees this possibility as highly unlikely. “Our long-held view is that there will not be drug pricing legislation in 2016 and that the likelihood of drug pricing regulation is very small in 2017,” he explained.

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Evercore ISI sees no chance that a Republican majority in Congress will pass any form of drug pricing legislation this year, and they believe that President Obama will not attempt a drug pricing-related executive order.

When it comes to 2017, the firm’s base-case prediction is that Republicans will maintain their majority in Congress and that Clinton will be elected president. However, Haines adds that even if Clinton is elected and the Democrats win the majority in the Senate, the Republican majority in the House will still block any substantive drug legislation.

Disclosure: the author holds no position in the stocks mentioned.

Image credit: MarcNozell, Flickr.