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Anybody doing anything on it? Buying, selling, waiting, watching........buy it on a pullback? Or is it dead in the water? I own FSMEX and FSPHX. Any thoughts on them?
See current Barron's for a feature on pharma (just 1 segment of healthcare), LINK1LINK2
The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)
The article is a brief overview but read the Health Affairs article linked in the article for a better legal analysis. These authors think it is unlikely to succeed, as doctors, and hospitals voluntarily accept Medicare prices.
It would appear to me ( as a retired MD who had to participate in Medicare for my career if I wanted any patients) that no one is forcing Pharma to sell it's drugs, only that Medicare should be able to determine what price it will pay, just like it does for hospitals and physicians and all other services it has covered since 1965.
This is not a "taking" which seems especially true if Pharma is willing to sell these same drugs to veterinarians ( see Baron's article last week on dog vs people allergy med costs) and in Europe for far far cheaper prices.
If in fact this cases are successful, it will mean the end of Medicare, and probably health care in general, as the proposed costs for the Alzheimer's and Obesity drugs alone may bankrupt it.
This will eventually come back to bite Big Pharma, when citizens see the absolutely unaffordable prices for life saving drugs that will result, and health insurance companies go bankrupt, and patients stop all but life saving operations and procedures, even then people die.
Oh to answer the mutual fund question, I did a quick run through MFO for health care funds with best risk related returns, Martin numbers etc in last five years
Several to consider. I think active management is probably a better bet than an index
BHCFX is retail version of BHCHX
SHSAX SWHFX And PHSTX all come in close to top.
Interesting the only "Great Owl" is Schwab's SWHFX
Has the Big Pharma industry ever put forth justification for the large price differences for the same drugs sold in the US vs. other countries? I mean other than they can.
Adding: For the last 3-4 yrs I keep looking for the health sector to make a move. Lots of analysts and so forth say that it's time but nothing happens. I have a longstanding position in ABBV and a proxy for the bio-health little guys in POAGX (another longterm holding). Still waiting.
@Puddinhead: I recently sold XLV, but I am holding on to BHCFX. My inexpert opinion is that uncertainty (as alluded to in above analyses) will hold healthcare stocks back. However, an aggressive fund, such as the Baron one, might be able to find good growth opportunities. The market is certainly rewarding growth these days.
See current Barron's for a feature on pharma (just 1 segment of healthcare), LINK1LINK2
The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)
Thanks for the posts. It seems to me these Pharma companies will not win as sma3 said. It will turn everything upside down and cause chaos for years to come. I mean someone has to set prices for drugs.....so why not the biggest user, Medicare? They seem to have the right since they pay the most bills in the country. All you see on TV nowadays are commercials about drugs. So I think everybody is making money. And with elections coming, this should get lots of playtime all over the country. But if I remember.....they were only going to start with the 10 to 12 most widely used drugs first, and add some every year. So this will take time. This story could go on for years.
So, coming back.....I'm not sure what to do. Have owned these funds for years. Maybe hold tight for awhile and see how things go. All the talking heads are recommending it.....lol.
[Sara] GONZALEZ [host]: Another big question - do ads drive up prices? 'Cause, like, if drug companies are spending billions of dollars on TV ads, are we the ones paying for those ads every time we get a prescription? ... [Mary] CHILDS [host]: Drug companies don't just blow a ton of money on advertising and then pass the cost to consumers. It's more subtle. It's more us. When we see an ad for some brand-name drug, the ad makes us value that brand name. And when we value something, we will pay more for it - or at least we will ask our insurance company to pay more for it. ... GONZALEZ: And if you think about it, in the rest of the world, where these prescription drug ads are banned, consumers do not hear drug names every time they turn on the TV. So brands don't have the same power to get consumers to pay more. ... CHILDS: Pharma companies spent $6 billion on TV drug ads in 2016, but they spent $20 billion advertising directly to doctors, pushing drugs that we don't see on TV, like the addictive ones. This is how those drugs get sold.
"CHILDS: Pharma companies spent $6 billion on TV drug ads in 2016, but they spent $20 billion advertising directly to doctors, pushing drugs that we don't see on TV, like the addictive ones."
To be perfectly honest, and totally conflicted, I am not in the least bit proud of holding some healthcare companies, either their stocks directly or indirectly via my funds. I just found out that one fund I hold has a big position in Phillip Morris; do I sell it because of the bad odor, or look at all its other seemingly beneficial companies and hold on to the fund?
I'm conflicted as well. I wouldn't own Phillip Morris stock (and some other stocks) directly. I know some of my funds hold "questionable" stocks but I don't sell the funds solely for this reason.
It's difficult to find superior funds without applying personal screens. ESG funds that align with an investor's values may offer a potential solution. Direct indexing can also be utilized to achieve the desired outcome.
"CHILDS: Pharma companies spent $6 billion on TV drug ads in 2016, but they spent $20 billion advertising directly to doctors, pushing drugs that we don't see on TV, like the addictive ones."
.... which is why patients with various conditions might pay $25 or $50 at the pharmacy and see their receipt proudly saying "your insurance saved you $1103.95!" (or more) ..... cut out the D2C marketing and I bet 40-70% of drug price will evaporate. But everyone's got their grubby little fingers in the pie, because $$$$.
Relatedly, I have a friend who did some research on carparal tunnel remedies and saw that in India injections of saline were providing proven relief. It's not an FDA-approved treatment in the US, though... her doctor says it's probably because saline is essentially salt water and salt water is practically free, so there's no profit in it for anyone if it gets approved. I don't think their doc was far off....
The PBS segment from Friday (I linked earlier in the thread) focused on the advent of pharmaceutical middlemen / brokers - a fairly recent development. These are companies that serve as a “broker” and set the prices drug wholesalers or insurance companies pay to big pharma and, in the end, what retail must pay and than charge customers. ”Gouging” is a better term than brokering.
Anyways … these middlemen / brokers have been buying up the insurance companies that cover prescription drugs. One they bought is Optum RX - which happens to be mine (as part of my retirement benefits). And that helps explain why with insurance I might pay $30, $40 or more for a common drug, while by skipping insurance and printing out a Good RX coupon in advance I might get the same medication for $10. Really nuts.
ISTM David Giroux in the recent Barron’s interview prophesied that big pharma will be a better investment if the R’s win the Presidency in 2024. So politics might enter into the Pud’s question. Healthcare has been the “in” thing for as long as I can remember. Old Ted liked it. Personally, I tend to run the other way when something’s in vogue - often at my own expense. Thus, I’ve never invested in it aside from indirectly through some fund(s).
these middlemen / brokers have been buying up the insurance companies that cover prescription drugs. One they bought is Optum RX
The corporate structure is a bit more muddled than that. The major presecription benefit managers (PBMs) are owned by insurance companies or their parents. United Health Group (parent of United Healthcare) owns Optum Inc. (including OptumRx), CVS acquired Caremark (now branded CVS Caremark) a few years ago (and acquited Aetna more recently), and Cigna owns ExpressScripts.
While Optum services hundreds of insurance companies, 2/3 of its revenue comes from United Healthcare - suggesting that PBMs are largely arms of insurance companies rather than independent third party service providers.
CNBC noon show today featured a short discussion on prospects for healthcare in the near term. Both participants were cautious to negative, one saying that despite the return of growth stocks this year, biotech has not seen any rally. Merck reports earnings this week, so something to watch. Joe Terranova opined that healthcare remains a defensive sector and said he might sell his biotech index holding this week. YMMV.
I'm 15% in healthcare, but it's all through funds. Over the years, I've seen that my ethical filters just don't work, because at every turn, I'm battling the behemoth called (conscience-less) Capitalism. It sickens me, but what's a mother to do?
Hope all is well with you and yours. So, what a run since 23, no?
Finally, healthcare rises this year. Fido numbers say FSMEX 6.39%, FSPHX 5.49%. These funds I wanted to sell but they were so bad. So now they rise in a bad time....the election.....but this time, I hope it's different....lol. Bigger things to worry about.
All I hear about is AI. So tired of it, really. Have we nothing else but the 7? Really, I guess not since we're back to the 2020 election. Have we no one else??? Anyway, back to topic...have any of you kept your holdings in healthcare??? I know some sold. I understand that. I stand at 11% in the space, so I hope for a turn. It's something that I thought was core to hold to the end with the aging boomers and all. Saying that, does anyone know any retirement home REITs?
The Brown One on our walks is very pro health, saying, "You people will spend what it takes to stay alive." Yes, I said, it would stand to reason. No one wants someone to die. At that point, money is not important.
What the Dukester said next stunned me. "Would you spend money on me to save me to live longer, Pudd?" Being out in the cold and having 2 cups of coffee, I said, "Yes" right away. With a smile looking back at me, he said, "Now, tell me why healthcare is not core forever?"
I hate long cold walks in the morning with Brown. It tends to not end well. Drats! Drats! and double Drats!!!!
There is a lot of chatter and even some well reasoned thinking that health care may do well this year.
In particular medical device companies and pharmaceuticals supposedly may play "Catch up" as people get surgeries they postponed during covid. Biotech is also going to revive, supposedly.
Health insurance firms are lagging, as their costs go up when people use more drugs and medical devices, and the DOJ investigation of UNH may go somewhere.
I would think active funds are better positioned than an index ETFs, but I don't think anybody can predict the outcome of drug trials. Look at VKTX up over 100% this week on a maybe marginally better GLP1-1 weight loss drug. Who knew? If you did and you traded on that info, I hope you enjoy prison food.
As far as "senior living facilities" there are several REITs that own them and medical office buildings, but I would do my homework very carefully. Senior facilities promise the world but then most end up cutting services and amenities when costs go up, living a lot of dissatisfied seniors, many of whom can move. Most of the senior living facilities I have experience with, even in high end markets have not done well.
The typical REIT model here is triple-net. A lot of the managements have sold the real estate back to the REIT which then has them over a barrel with rent increases. Just google "Medical Properties Trust" to see ho quickly this can go bad.
I have not sold any health care, yet. Would love to sell XBI and PTH, which make up a minuscule portion of the IRA. Still a ways to go before that happens. Bought high on those.
Still having fun with FSMEX. Bought low in the IRA, and lower in the taxable.
Comments
The PHARMA industry (MRK, JNJ, BMY, ALPMY, etc) is launching legal wars against Medicare/CMS on its new DRUG PRICING negotiation authority. The pharma industry is hoping to delay, slow or reverse the implementation by winning a national injunction in SOME court and then eventually fighting it before the SUPREMES. The US Chamber of Commerce has also asked a federal court for injunction against Medicare/CMS. CONGRESS passed the related law as part of the Inflation Reduction Act, and since then, the pharma index has lagged. (The current system is that private PBMs and healthcare systems negotiate drug prices, and then the Medicare/CMS just goes along. This system was seriously broken by Biogen’s/BIIB greedy pricing of its 1st Alzheimer drug that was approved by the FDA. Eventually, that drug failed in the marketplace due to resistance from Medicare/CMS. Biogen’s 2nd Alzheimer drug has done better.)
It would appear to me ( as a retired MD who had to participate in Medicare for my career if I wanted any patients) that no one is forcing Pharma to sell it's drugs, only that Medicare should be able to determine what price it will pay, just like it does for hospitals and physicians and all other services it has covered since 1965.
This is not a "taking" which seems especially true if Pharma is willing to sell these same drugs to veterinarians ( see Baron's article last week on dog vs people allergy med costs) and in Europe for far far cheaper prices.
If in fact this cases are successful, it will mean the end of Medicare, and probably health care in general, as the proposed costs for the Alzheimer's and Obesity drugs alone may bankrupt it.
Every hospital chain and doctor's group (even the "non-profits" like Ascension with it's billion dollar plus hedge fund
https://www.statnews.com/2021/11/16/ascension-running-wall-street-style-private-equity-fund/) will sue Medicare and Medicaid to force them to pay them what they think they are worth.
This will eventually come back to bite Big Pharma, when citizens see the absolutely unaffordable prices for life saving drugs that will result, and health insurance companies go bankrupt, and patients stop all but life saving operations and procedures, even then people die.
Several to consider. I think active management is probably a better bet than an index
BHCFX is retail version of BHCHX
SHSAX SWHFX And PHSTX all come in close to top.
Interesting the only "Great Owl" is Schwab's SWHFX
Adding: For the last 3-4 yrs I keep looking for the health sector to make a move. Lots of analysts and so forth say that it's time but nothing happens. I have a longstanding position in ABBV and a proxy for the bio-health little guys in POAGX (another longterm holding). Still waiting.
Thanks for the posts. It seems to me these Pharma companies will not win as sma3 said. It will turn everything upside down and cause chaos for years to come. I mean someone has to set prices for drugs.....so why not the biggest user, Medicare? They seem to have the right since they pay the most bills in the country. All you see on TV nowadays are commercials about drugs. So I think everybody is making money. And with elections coming, this should get lots of playtime all over the country. But if I remember.....they were only going to start with the 10 to 12 most widely used drugs first, and add some every year. So this will take time. This story could go on for years.
So, coming back.....I'm not sure what to do. Have owned these funds for years. Maybe hold tight for awhile and see how things go. All the talking heads are recommending it.....lol.
God bless
the Pudd
p.s.,
Crash +1
The US and New Zealand are the only two countries that permit prescription drugs to be advertised on TV.
For how this all started, here's a 2021 Planet Money piece, "This Is Your Brain On Drug Ads"
https://www.npr.org/transcripts/1035147636
"CHILDS: Pharma companies spent $6 billion on TV drug ads in 2016, but they spent $20 billion advertising directly to doctors, pushing drugs that we don't see on TV, like the addictive ones."
I wouldn't own Phillip Morris stock (and some other stocks) directly.
I know some of my funds hold "questionable" stocks but I don't sell the funds solely for this reason.
It's difficult to find superior funds without applying personal screens.
ESG funds that align with an investor's values may offer a potential solution.
Direct indexing can also be utilized to achieve the desired outcome.
Relatedly, I have a friend who did some research on carparal tunnel remedies and saw that in India injections of saline were providing proven relief. It's not an FDA-approved treatment in the US, though... her doctor says it's probably because saline is essentially salt water and salt water is practically free, so there's no profit in it for anyone if it gets approved. I don't think their doc was far off....
Anyways … these middlemen / brokers have been buying up the insurance companies that cover prescription drugs. One they bought is Optum RX - which happens to be mine (as part of my retirement benefits). And that helps explain why with insurance I might pay $30, $40 or more for a common drug, while by skipping insurance and printing out a Good RX coupon in advance I might get the same medication for $10. Really nuts.
ISTM David Giroux in the recent Barron’s interview prophesied that big pharma will be a better investment if the R’s win the Presidency in 2024. So politics might enter into the Pud’s question. Healthcare has been the “in” thing for as long as I can remember. Old Ted liked it. Personally, I tend to run the other way when something’s in vogue - often at my own expense. Thus, I’ve never invested in it aside from indirectly through some fund(s).
The corporate structure is a bit more muddled than that. The major presecription benefit managers (PBMs) are owned by insurance companies or their parents. United Health Group (parent of United Healthcare) owns Optum Inc. (including OptumRx), CVS acquired Caremark (now branded CVS Caremark) a few years ago (and acquited Aetna more recently), and Cigna owns ExpressScripts.
One interesting facet about these PBM subsidiaries alluded to in the PBS piece is that since they're not insurers, they "can have a higher profit margin than the 15 to 20 percent that's regulated. Insurers are mandated [by the ACA] to spend 80 to 85 percent on medical costs."
https://www.healthcarefinancenews.com/news/secret-weapon-unitedhealths-optum-business-laying-waste-old-notions-about-how-payers-make-money
While Optum services hundreds of insurance companies, 2/3 of its revenue comes from United Healthcare - suggesting that PBMs are largely arms of insurance companies rather than independent third party service providers.
Hope all is well with you and yours.
So, what a run since 23, no?
Finally, healthcare rises this year. Fido numbers say FSMEX 6.39%, FSPHX 5.49%. These funds I wanted to sell but they were so bad. So now they rise in a bad time....the election.....but this time, I hope it's different....lol. Bigger things to worry about.
All I hear about is AI. So tired of it, really. Have we nothing else but the 7? Really, I guess not since we're back to the 2020 election. Have we no one else??? Anyway, back to topic...have any of you kept your holdings in healthcare??? I know some sold. I understand that. I stand at 11% in the space, so I hope for a turn. It's something that I thought was core to hold to the end with the aging boomers and all. Saying that, does anyone know any retirement home REITs?
The Brown One on our walks is very pro health, saying, "You people will spend what it takes to stay alive." Yes, I said, it would stand to reason. No one wants someone to die. At that point, money is not important.
What the Dukester said next stunned me. "Would you spend money on me to save me to live longer, Pudd?" Being out in the cold and having 2 cups of coffee, I said, "Yes" right away. With a smile looking back at me, he said, "Now, tell me why healthcare is not core forever?"
I hate long cold walks in the morning with Brown. It tends to not end well. Drats! Drats! and double Drats!!!!
God bless
the Pudd
In particular medical device companies and pharmaceuticals supposedly may play "Catch up" as people get surgeries they postponed during covid. Biotech is also going to revive, supposedly.
Health insurance firms are lagging, as their costs go up when people use more drugs and medical devices, and the DOJ investigation of UNH may go somewhere.
I would think active funds are better positioned than an index ETFs, but I don't think anybody can predict the outcome of drug trials. Look at VKTX up over 100% this week on a maybe marginally better GLP1-1 weight loss drug. Who knew? If you did and you traded on that info, I hope you enjoy prison food.
As far as "senior living facilities" there are several REITs that own them and medical office buildings, but I would do my homework very carefully. Senior facilities promise the world but then most end up cutting services and amenities when costs go up, living a lot of dissatisfied seniors, many of whom can move. Most of the senior living facilities I have experience with, even in high end markets have not done well.
The typical REIT model here is triple-net. A lot of the managements have sold the real estate back to the REIT which then has them over a barrel with rent increases. Just google "Medical Properties Trust" to see ho quickly this can go bad.
Still having fun with FSMEX. Bought low in the IRA, and lower in the taxable.