Drug Stocks Surge After U.S. Says Cost Panel Will Wait Until 2017
Source: Bloomberg
Drug and biotechnology stocks surged Wednesday after the U.S. government said a cost-cutting mechanism created under Obamacare, known as the Independent Payment Advisory Board, or IPAB, will likely be triggered in 2017, not this year as some investors had feared.
The 2017 projection is in line with estimates from last year by Medicares Board of Trustees, which on Wednesday released its annual report on the U.S. health-care programs long-term finances. The trustees also said that Medicares hospital insurance trust fund, which finances some care under the program, will be unable to meet all of its obligations in 2028,
two years earlier than projected.
Investors had been watching nervously for news of the determination, concerned that it could trigger this year and set in motion reductions in Medicare payments to biotech and pharmaceutical companies, as well as other health-care firms. The Nasdaq Biotechnology Index of 189 stocks had fallen for 11 of the past 12 trading days as of Tuesdays close.
The biotech index rose as much as 2.7 percent for the biggest intraday gain in more than a month, and the broader Standard & Poors 500 Health Care Index of 56 stocks was up 1.4 percent.
Read more: http://www.bloomberg.com/news/articles/2016-06-22/medicare-fund-to-run-short-in-2028-ipab-still-projected-in-2017