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By Lewis Krauskopf
March 7 (Reuters) - Shares of large U.S. pharmaceutical and biotechnology companies sold off on Tuesday after President Donald Trump said he was working on a "new system" to reduce prices in the industry.
"I am working on a new system where there will be competition in the Drug Industry," Trump tweeted. "Pricing for the American people will come way down!"
Shares of Pfizer Inc and Merck & Co shed 1.1 percent, and Amgen Inc dropped 1.4 percent.
The Nasdaq Biotechnology index was 1.4 percent lower, while the NYSE Arca Pharmaceutical index fell 1.2 percent.
The tweet came as Republicans late on Monday unveiled legislation to dismantle the Affordable Care Act, known as Obamacare, which Trump has long vowed to repeal and replace.
After the release of the Obamacare replacement plans, hospital stocks were lower, with Tenet Healthcare and Community Health Systems each down about 4 percent. Shares of most health insurers were modestly higher.
Healthcare was the worst-performing of the 11 major S&P sectors, falling 0.7 percent.
Trump's tweet was the latest of his comments about high drug pricing.
As president-elect, Trump said in January that the industry was "getting away with murder" in what it charges the government for medicines.
In his speech to Congress last week, Trump said more needs to be done to bring down "artificially high" prices for prescription drugs. Leaders of several large drugmakers met with Trump at the White House in January. Even with Tuesday's declines, the healthcare sector has outperformed the broader market this year, rising 8.5 percent against a 5.9 percent climb for the S&P 500. (Reporting by Lewis Krauskopf in New York; Editing by Chizu Nomiyama and Lisa Von Ahn)