Drug price inflation slows under investor strategy

Drug prices are still rising in 2020, but the rate of inflation appears to be slowing down. For investors, however, that might be good news, according to The Wall Street Journal.

At the turn of the year, several major drugmakers hiked prices on thousands of drugs––2,167 drug price increases, according to Morgan Stanley analysts cited by the Journal. That’s up 17% from the same time period last year. The increases were “fairly mild,” the Journal noted, with most price increases below 10% and half less than 5%.

While the short-term gains might be lower for investors banking on higher drug prices, the long-term strategy may pay off with the 2020 election. Investors may be looking to lay low to avoid additional scrutiny from Washington, D.C. prior to the election by keeping drug price inflation down.

“With an election looming, investors should be willing to accept a loss of short-term earnings power to avoid attracting unwanted attention from Washington and the resultant threats to the industry’s business model,” the WSJ wrote.

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