Those headwinds aimed at routine drug price increases in the US is now becoming a gale force political storm that is drawing down share prices across the biopharma industry.
Cardinal Health today joined the growing lineup of drug distributors – like McKesson – to warn that the slowing tempo of price hikes will likely ding its financial results for the year.
“Short-term headwinds, particularly around pharmaceuticals, are quite challenging,” said CEO George Barrett, forecasting rising branded prices of 7% to 9%, according to the Wall Street Journal.
Case in point: Enbrel. On Friday Amgen reported that Enbrel sales were flat and that it was forced to offer some hefty discounts to keep it on formularies. Future price hikes? Don’t expect any, Amgen execs told analysts. And Biogen made it clear last week that the only way it could flog more revenue out of the Tecfidera franchise was through some big annual increases — increases that have started to wriggle in the spotlight as more lawmakers turn their attention to the growing list of companies like Valeant, Turing and Mylan which have been roasted for jacking up prices.
Price gouging is out, and the trend threatens double-digit annual increases at a whole host of big and little biopharmas, including Eli Lilly. So it’s no wonder that the biotech stock index bumped down 2% on Friday. If this is more than a temporary setback, those new drugs in the pipeline may face a kickback on price as well, so the debate will also affect companies solely focused on R&D for now, as well as the companies most interested in doing deals for them.
A number of the older drugs getting stamped with ever-higher prices are also facing generic competition, which will start a new wave of biosimilar prices at the same level these drugs were priced at only a year ago. And that also will likely factor into the pricing debate now playing out in an election year.
Hillary Clinton made it clear that she wanted to start a war on pharma during her campaign. It plays well with voters steaming over what they’re being forced to pay for drugs. And the prospect of price gouging tends to rile the most moderate in the electorate.
The question is whether the debate over drug prices dissipates after the votes are counted, or lawmakers decide to do something binding to rein in those retail prices, aside from applying shaming tactics for the worst abusers.
The jury is still out on that question, but they don’t look happy about Big Pharma right now.
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