Trump expands pharma pricing deal as healthcare stocks keep climbing

President Trump added nine pharmaceutical firms to his drug-pricing deal on Monday. The companies pledged $19.6 billion combined toward U.S. manufacturing, according to a White House fact sheet. The companies also agreed to offer their drugs to every state Medicaid program at discounted prices. Trump said the combined deals would save Americans more than $600 billion. The White House said 17 companies had already joined the pricing framework over the past year. Trump said 26 companies now represented 90% of the domestic pharmaceutical market. He said the remaining 10% would also join and had no choice. The SPDR S&P Biotech ETF, XBI, has climbed 80% in the last 12 months. UBS global head of biotechnology equity research Michael Yee said the rally reflected major clinical wins. Yee said the pricing deals had reduced fears of a broader industry crackdown. Healthcare stocks completed their best quarter yet. Yee said the pricing deals had removed a major source of uncertainty for the sector. He named Merck as a top pick. Merck's melanoma vaccine, developed with Moderna, met its main trial goals in a trial involving more than 1,100 patients. The study reported results on August 19. Merck's antibody-drug conjugate sacituzumab tirumotecan posted a positive lung cancer trial result earlier this year. The drug is being tested in 17 late-stage studies. The Food and Drug Administration approved Revolution Medicines' pancreatic cancer drug daraxonrasib on August 26. The therapy nearly doubled median survival compared with chemotherapy in a late-stage trial. Yee also named Bristol Myers Squibb. UBS has a Buy rating on the stock. The company expects several late-stage trial results before year-end. Yee said those results could help offset revenue lost to patent expirations. He said pharmaceutical companies had record cash piles. He said the companies were directing more cash toward research and development after several years of low valuations. Yee said valuations were still not stretched and Washington's pricing overhang was easing. He described the current move as the start of a longer re-rating rather than a short-lived bounce.