Thursday, August 25, 2016

Epi-pens and Clinton's presumed victory

Let's take a little detour into an overlap between politics an one of my other obsessions: stocks.  Yes, I bash Trump, but I'm not one of you commie money-haters.  I like money, and I want more, so I pay attention to stocks.

Clinton will probably win, absent some weird, intervening thingamajig, like a terrorist event or a Putin-engineered whatever.  Also, as you may have heard, the price of epinephrine injection pens has gone way up, Clinton and many others have been criticizing it, and the stock price of Mylan, the company that makes the pens, has tanked, bringing down a lot of the pharma industry with it.  And we've seen this before.  In response to statements and tweets by politicians.

Let's just assume Clinton will win at this point since it would take an external event for Trump to win.  What, specifically, could the government do about price hikes?  Not much.  Here are the broad categories.

1)  Legislation.  No chance.  The Republicans will control the House.  Why?  See my comments here.  Here is what Paul Ryan believes:  Market incentives for research on medical technology require the possibility of a big payoff.  Once the government starts restricting those payoffs, even in circumstances that look really bad (see:  Martin Shkreli), those incentives weaken, and incentives to fund research dry up.  You don't have to agree.  The point is that Paul Ryan believes it.  Legislation won't happen.  Anyone who bases stock purchases on the assumption that Paul Ryan will let legislation through is a fool, or doesn't understand how Congress works.

The only thing that might get through is something to help consumers buy epi-pens if they can't afford it because everyone knows someone who needs them to, ya' know, live.  But, if that did get through, that would be more profit for Mylan, not less.  Mylan stock then goes up.  Price caps?!  In a Republican-controlled House?  No... fucking... chance... in... hell.

2)  Regulation.  The regulatory process is run through the executive branch, not through Congress.  Therefore, it is under the direct control of the President.  It is just a hell of a lot weaker than legislation.  Oh, and there is no way to impose price caps or anything like that.  Absent legislation, the effects of regulation are marginal.  Mylan's stock tanked yesterday.  If that's fear of regulation rather than legislation, that's nuts.

3)  Moral suasion.  Um, supposedly, like, politicians can, like, um, shame people into, like, being nice, or some fucking hippy shit.  So, congressional hearings and stuff will make companies stop raising prices, or something.  Therefore, by calling attention to price hikes, stock prices should tank, right?

I have no idea what the right price of Mylan stock is.  No sane person should trade individual stocks.  Do what Warren Buffett says you should do:  a simple, S&P index fund, unless you are willing to do a lot more research, and even then, use passively managed index funds.  Anyone who trades stocks is either a crook or a chump.  If you aren't using inside information, you're the chump.

Clinton will probably win.  This year is crazy, and we always need to build in room for more crazy stuff to happen.  Given her druthers, would she do something to stop companies like Mylan from raising the price of epi-pens?  Yup.  But, she'll be President, not Queen.  We've had policy gridlock since the passage of the 2011 Budget Control Act.  Nothing big has happened since then, and nothing big will happen again until one party gets unified control of everything.  Price controls on drugs?  That would be "yuuuge," as The Donald would say.  Ain't gonna happen.

So those stock reactions?  Pretty funny.

And don't trade stocks.  Just laugh at the fluctuations.  Cheaters and chumps...

5 comments:

  1. I'm REALLY not sure Paul Ryan believes that.

    I'd be willing to accept the simpler "what's good for business is good for 'Merica" version, or the crasser "CEOs deserve whatever they want" version.

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    1. Paul Ryan forces his interns to read Atlas Shrugged, and you don't believe that he believes its central conceit?

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    2. It's a big leap from "fuck you, the world exists to serve me and I'm awesome" to "Market incentives for research on medical technology require the possibility of a big payoff."

      It's a much shorter leap from "John Galt" to social darwinism.

      And, given Paul Ryan's "budgets" over the years, I'm inclined to think that this particular emperor is totally fucking naked. Has good political instincts; doesn't have much intellectual/ideological depth.

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    3. Actually, the plot of Atlas Shrugged is that the makers are sick of being taxed and regulated, so they go off and form a perfect libertarian utopia, which they can do because they are the ones who do cool stuff. Paul Ryan's agenda has always been about cutting taxes on the makers, and he always talks in terms of makers and takers. Did you miss that?

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    4. That's what I said.

      What you said in your post implied some kind of understanding of conservative economic theory.

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