Market Insider

Health-care stocks tumble after Trump tweets drug prices will come 'way down'

President Donald Trump's claims that he will bring drug prices "way down" sent health-care stocks tumbling Tuesday morning.

@realDonaldTrump I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!

On Tuesday, pharmaceutical stocks were the biggest laggards in the for much of the morning, with the health-care sector closing the day down a little more than half percent.

The iShares Nasdaq Biotechnology ETF, or IBB, fell 1.6 percent in its worst day in seven weeks.

The big names in the pharma industry all traded in red territory.

Merck fell nearly 1 percent, Lipitor-maker Pfizer fell a little more than 1 percent, British-based GlaxoSmithKline lost almost 1 percent and Switzerland-based Novartis closed the day down nearly 2 percent.

Mylan, the maker of the EpiPen allergy shot, declined nearly 2 percent, while Perrigo, a manufacturer of private label over-the-counter pharmaceuticals, dropped about 2 percent, too.

Trump said in January that pharmaceutical companies are "getting away with murder" in what they charge the government for medicines.

He has promised to change the way firms compete against each other to price products, putting the drug industry on edge awaiting any policy changes.

Trump's comments came Tuesday morning, a day after the GOP unveiled its proposed replacement for the Obamacare health-reform law. Hospital stocks were trading lower Tuesday on the news. Tenet Heathcare shed more than 7 percent by market close, while Community Health Systems slipped more than 9 percent.

Nasdaq biotech ETF 1-year performance

Source: FactSet

Even with Tuesday's losses, the health care sector of the S&P 500 has gained more than 10 percent over the past 12 months, and more than 8 percent for the year.

The iShares Nasdaq Biotechnology ETF is up more than 9 percent over the past 12 months, and more than 11 percent for the year.