3 Mutual Funds To Gain From Strength In U.S. Healthcare

A steady influx of foreign as well as domestic investments in U.S. healthcare has gone a long way in boosting gains for the space. Further, a burgeoning economy has necessitated diversification by the top players in the industry.

The health care sector ended 2018 on a high. As a matter of fact, the Health Care Select Sector SPDR expanded 2.5% in 2018, emerging as one of the two sectors to end the year in the green. This can be attributed to a higher-than-usual number of FDA approvals as well as continued influx of funds into the sector.

Per a recent study, U.S. healthcare has caught the fancy of American and foreign venture capitalists alike. Under such encouraging conditions, investing in health care mutual funds seems prudent.

Congress Seeks to Establish Fair Drug Pricing

Per the terms of the latest proposal by the Centre for Medicare and Medicaid Services (CMS), a new drug pricing model is to be established. To be in use from 2020 through 2025, this model will be a reference pricing model.

The model will use the International Pricing Index (IPI) to reach a consensus by referring to international prices for selected Part B drugs. Further, new drugs will be assessed by a joint committee of providers, insurers and hospital organizations. Further, patient groups will have a non-voting position in the committee.

However, customers will have to take into account the minimum as well as the median price of that drug in any therapeutic class. Such an arrangement distributes costs evenly between the manufacturer and the patient and establishes a fair pricing system which is beneficial to both parties.

Venture Investment and IPOs to Propel Health Care

Chinese venture-capital funds have invested a whopping $1.4 billion in U.S. biotech and drug companies in the period between January and March 2018. There were about 76 health care IPOs in 2018. Coming to average returns, health care IPOs posted an average return of 8.9% on total proceeds worth $9.1 billion.

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