- President Donald Trump and former Vice President Joe Biden have very different positions in healthcare, and whoever wins in November will have a massive impact on the industry.
- RBC analysts identified seven health stocks investors should buy to prepare for a Biden win.
- They predicted that Gilead Sciences, UnitedHealth Group and Mylan would do well regardless of who wins.
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President Donald Trump and former Vice President Joe Biden faced very different health policy positions in November.
Your decisions will affect the hospital, insurance, pharmaceutical and medical device industries. Three months until the election, RealClearPolitics query Averages show that Biden is a 7.4 points ahead about Trump.
Biden wants to build on the Affordable Care Act, signed by former President Barack Obama, and give people the opportunity to buy a state health insurance plan instead of private insurance. If more people are insured, it will put more money in the pockets of healthcare providers.
Conversely, Trump has signed a lawsuit that threatens to override the entire healthcare law, which would result in massive disruptions across the healthcare industry. Despite the lawsuit, RBC analysts predict a "status quo" for the healthcare industry should Trump win.
The President has recently signed several drug pricing regulations, but the rules around them will not be adopted until after the election, and even then the industry is likely to challenge them in court. Biden wants the government to set drug prices, but if he signed the House Democrats plan, not all drugs would be affected.
In economic policy terms, Biden has promised to reverse Trump's legally-signed tax cut by raising the corporate tax rate from 21% to 28%.
Continue reading: Trump's Medicare chief has a big decision to make about whether doctors should be paid for phone calls and video visits. Here are the top three concerns she is considering about the future of healthcare.
Here are the seven health stocks that RBC analysts say investors should buy to prepare for a Biden win. Three of them – Gilead Sciences, UnitedHealth Group and Mylan – are also top picks when Trump triumphs.
(1) Gilead Sciences
Gilead Sciences (GILD) is a large biotech company that develops the coronavirus treatment Remdesivir. The company also sells drugs to treat viruses such as HIV and hepatitis C. Because of the company's coronavirus work, the RBC says it is well positioned to benefit from Trump or Biden administration. And even if a Biden government and a Democratic Congress are trying to lower drug prices, Gilead's HIV treatments will not be very successful, the analysts said.
"We believe that GILD would remain relatively isolated from a Biden victory and a democratic victory," they wrote.
(2) R1 RCM
R1 RCM (RCM) helps hospitals and doctors collect payments from insurance companies, and their earnings are based on how much money their customers make. Biden's plans to extend health insurance coverage to more people would result in more patients seeing their doctors and, according to R1, more money on RBC.
(3) Adjust health
Adapt health (AHCO) is a medical device provider that offers products such as CPAP machines and wheelchairs for patients at home. While a Biden win increases the likelihood of price pressure for the medical device industry, Adapt Health could benefit from industry disruptions and even win competitors who face financial difficulties, RBC said.
(4) UnitedHealth Group
UnitedHealth Group (UNH) is the largest US health insurer with a pharmacy services manager, technology and advisory arm, and medical care company. The company's wide range of business is part of the reason why RBC analysts believe it can thrive under Trump or Biden. In a Biden presidency, UnitedHealth would benefit from efforts to expand the Affordable Care Act, according to the RBC.
(5) HCA Healthcare
HCA Healthcare (HCA) operates the largest chain of nonprofit hospitals. Many of the company's hospitals are located in Texas and Florida, states that, according to the RBC, have relatively high uninsured rates because they haven't expanded Medicaid. Under a Biden presidency, more people in these states would receive insurance coverage, which would give HCA more paying customers.
Continue reading: These are the most powerful people who advise Joe Biden in healthcare when he runs against Trump
AbbVie (ABBV) is a pharmaceutical company that sells Humira arthritis treatment and Imbruvica cancer therapy. According to the RBC, the company is unlikely to be severely affected by drug price restrictions in a Biden government. In addition, about 9% of sales come from cosmetic products such as botox, for which people usually pay in cash.
Mylan (MYL) is a large manufacturer of generic drugs. It connects to a similar business that is separated from the pharmaceutical company Pfizer. After the deal, only 25% of the company's sales will come from the United States, which, according to RBC, will help protect the company from changes in health policies. This makes the company a good choice whether Trump or Biden are president, according to analysts. It is also working on medications known as biosimilars that could benefit from efforts to lower drug prices in a biden government.