Pharma stocks fall after new drug price probe in US
US politicians from the resurgent Democratic party have launched a probe into “unsustainable” drug price rises, prompting their shares to drop suddenly.
AstraZeneca, Novo Nordisk and AbbVie were among the worst hit as biotech stocks fell by around 1.5% after the intervention by Democrat Representative Elijah Cummings, chairman of the Committee on Oversight and Reform.
President Donald Trump has already tried to tackle rising drug prices with a raft of policies, including a proposal to base Medicare drug prices on those from a basket of other countries.
But Democrats, who now have control of the House of Representatives following mid-term elections, are taking matters into their own hands after becoming dissatisfied with the impact of Trump's policies.
Cummings has sent letters to the drug makers asking for information about increases to drug prices, and is researching R&D costs and strategies about market share.
In a statement he said: “For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits.
“The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices.”
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Elijah Cummings[/caption]
Cummings is concerned about the increasing cost of drugs funded by Medicare Part D, which helps people on the state-funded health scheme cover self-administered prescription drug insurance premiums.
Government figures cited by Cummings show that part D payments for brand-name drugs increased by 62% from 2011 to 2015 after taking into account manufacturers’ rebates, even though the number of prescriptions fell by 17%.
Cummings has published a list of the companies and drugs he is investigating – many of which are blockbusters whose patents have recently expired, or are due to expire soon.
AbbVie’s ageing inflammatory diseases blockbuster Humira (adalimumab) is among those named in the probe, which is off-patent in Europe but protected until 2023 in the US because of the company’s legal defences.
Also on the list is Amgen’s inflammatory diseases drug Enbrel (etanercept) - a drug that could face competition from FDA-approved biosimilars when a long-running legal case is resolved.
Teva’s off-patent multiple sclerosis drug Copaxone (glatiramer) is included on the list, which is now facing generic competition from Mylan.
Teva settles pricing lawsuit for $135 million
In a separate development Teva paid the US state of Illinois $135 million in a settlement following a lawsuit that alleged that pharma companies inflated prices for prescription drugs, increasing Medicaid reimbursement costs.
In a statement, the outgoing Illinois attorney general Lisa Madigan said she recovered the costs in an agreement that resolves the allegations against subsidiary Teva Pharmaceuticals USA Inc.
The settlement stems from a 2005 lawsuit filed by Madigan against 47 drug makers, including Teva, for deceptive practices related to the average wholesale price (AWP) of several prescription drugs.
Madigan’s lawsuit alleged the drug makers fraudulently published inflated AWPs, used by state-funded Medicaid schemes to determine the reimbursement amounts for drugs prescribed to patients.
The lawsuit alleged the inflated prices have resulted in overpayment of drug costs by the state.
This was one of the final acts from Madigan, who stepped down yesterday after deciding not to seek re-election after 16 years in office.
Madigan’s lawsuit continues to be litigated against nine remaining manufacturers, and several other generic firms are under investigation by authorities across the US.
pharmaphorum has contacted Teva for comment.
