Kennedy’s HHS nomination triggered a sell-off in healthcare stocks
NYSE Arca Pharmaceutical Index: -5%, SPDR S&P Biotech ETF: -10%
Policy Conflicts
Kennedy wants stricter FDA regulations on drug companies
Ramaswamy advocates FDA deregulation
Trump has historically flip-flopped on healthcare policies
Healthcare Sector Outlook
Big Pharma stocks are trading at a 35-50% discount to the S&P 500
Opinion
The photo of Kennedy dining with Trump at McDonald's is more than a PR mishap—it is a symbol of deeper contradictions within the administration’s healthcare policies. Kennedy’s anti-corporate stance clashes with Trump’s deregulation agenda, and the policy divide within Trump’s own team signals a lack of clear direction. Given Trump’s track record of inconsistent healthcare policies, investors should expect continued uncertainty rather than sweeping reforms.
Core Sell Point
Trump and Kennedy’s McDonald’s meal isn't just ironic—it’s a perfect metaphor for an administration riddled with contradictions, where "Making America Healthy Again" collides with political and corporate realities.
A photo of Robert F. Kennedy Jr. sharing a McDonald’s meal with Donald Trump aboard Trump Force One has sparked early contradictions in the administration’s "Make America Healthy Again" agenda.
Donald Trump Jr. shared the image on X, joking, "Making America healthy starts tomorrow." While it's unfair to criticize Kennedy for enjoying fries and cola, the image highlights the paradox of a vaccine-skeptic health advocate dining with a fast-food enthusiast—the very man who once boasted about accelerating COVID-19 vaccine development.
Potential Conflicts in Healthcare Policy
Kennedy’s anti-corporate stance—particularly against Big Pharma—is more aligned with left-wing populism than Trump’s pro-business policies. While Trump prioritizes tax cuts and tariffs, he has lacked a consistent healthcare reform agenda. His previous attempts to reshape drug pricing and overhaul Obamacare were largely abandoned.
Kennedy’s nomination as Secretary of Health and Human Services (HHS) could bring significant regulatory uncertainty for the pharmaceutical industry. His calls for stricter FDA oversight over major drug companies stand in stark contrast to Trump’s deregulatory agenda—a divide already evident within Trump's camp.
For instance, Vivek Ramaswamy, a biotech investor and Trump ally, argues that the FDA is overly restrictive and hinders innovation. If Ramaswamy influences Trump’s decisions, it could lead to FDA deregulation, favoring pharmaceutical companies. The key question remains: Will Trump align with Kennedy's aggressive stance on Big Pharma, or will he side with the industry and Wall Street?
Market Reactions & Investor Concerns
Healthcare stocks plunged following Kennedy's nomination
NYSE Arca Pharmaceutical Index: -5%
SPDR S&P Biotech ETF: -10%
Big Pharma stocks are already trading at a discount
Currently priced ~35% below the S&P 500
Excluding Eli Lilly, the discount rises to 45-50%
Uncertainty looms over Kennedy’s actual influence
HHS oversees the FDA, NIH, and CDC, impacting over 80,000 employees
Kennedy has advocated caps on drug prices and tighter restrictions on pharmaceutical ads—policies viewed as worst-case scenarios for the industry
Despite these concerns, Kennedy may struggle to enact sweeping regulatory changes due to the sheer bureaucratic complexity of the FDA. According to BMO Capital Markets analyst Evan Seigerman, Trump is likely to appoint an industry-friendly FDA chief—just as he did in his first term with former Pfizer board member Scott Gottlieb.
Long-Term Implications
Investors should temper expectations for radical healthcare reforms.
Trump’s first term showed that healthcare reform is a slow, complex process requiring bipartisan compromise.
Kennedy’s opposition to obesity drugs (GLP-1 treatments) could backfire politically, limiting his ability to push through drastic policy changes.
Trump may roll back Biden’s Medicare drug pricing negotiation policy, providing relief to pharmaceutical firms.
The potential removal of FTC Chair Lina Khan—a critic of Big Pharma—could open the door for more biotech M&A activity.
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