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U.S. Drug Pricing Debate Heats up

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Published on : Oct 12, 2015

An overnight price hike was announced by Martin Shkreli in September for their patent drug Daraprim. The drug holds substantial potential as it is used on patients suffering from AIDS, malaria, and cancer. The biotech firm has earned the ire of multiple spokespersons in the pharma sector, as well as multiple politicians who are concerned with the issue.

Post the price hike, the scenario looks grim for drug makers once a reform will be introduced.

One of the protestors is presidential candidate Hillary Clinton. She has called the price hike as outrageous, while also commenting on the House Oversight Committee’s Democratic individuals having requested an official hearing regarding the unwarranted and excessive price hike.

The pharma stocks fells immediately afterwards amid sharp selloffs. The 21st September shares of Valeant that were priced at US$229, after which they fell rapidly to US$178.38 on the 30th of September. On Friday, they closed at US$176.99

At the same time, Mallinckrodt shares slipped from a 21 September value of US$73.87 to US$63.84 on the 30th of September. The firm’s shares on closing day this Friday when the company shares were valued at US$66.73.

According to a release by Morgan Stanley, the overall earnings in the global market will be enough to negate the impact of a price reform. The reform could be passed in a short duration and is most likely to have little to no effect on the top drug companies in the U.S.

On the other hand, biotech firms and specialty pharma companies rely heavily on drug pricing to earn benefits.

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