Pharma Stocks Decline as House Democrats Investigate Drug Prices

Journalist:
David Hundeyin @DavidHundeyin
January 15, 2019

Stock prices of twelve of the largest pharmaceutical companies in the USA have fallen sharply after the commencement of a Congressional investigation into prescription drug pricing practices. In a statement released yesterday, it was revealed that the House Oversight Committee chaired by Senator Elijah Cummings (D-Md) sent letters requesting information about their pricing strategies to AbbVie, Amgen, AstraZeneca, Celgene, Eli Lilly, Johnson & Johnson, Mallinckrodt, Novartis, Novo Nordisk, Pfizer, Sanofi, and Teva Pharmaceuticals as part of an inquiry into alleged price profiteering.

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According to information from the committee, the information requests included inquiries about three drugs respectively from AbbVie and Sanofi, two drugs respectively from Amgen, Pfizer and Novo Nordisk, and one drug each from AstraZeneca, Celegne, Eli Lilly, Johnson & Johnson, Novartis, Mallinckrodt and Teva.

Both Democrats and Republicans agree that something needs to be done to reduce prescription prices which are higher in the USA than pretty much anywhere else in the world.

President Donald Trump’s administration has introduced a number of reform proposals to lower price burdens for consumers – $333.4 billion in 2017 – including changes to Medicare Part B and Part D. House Democrats on their part have also made efforts to achieve price reductions including most recently a trio of bills sponsored last week by Senator Cummings, Senator Bernie Sanders (D-Vt) and Rep. Ro Khanna (D-Ca).

An excerpt from the committee’s statement reads as follows:

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.

Pharma Stock Prices Fall Following Announcement

In the wake of the news of the information requests sent to the 12 companies, their stock prices recorded sharp declines, led by AstraZeneca which fell 7.69 percent from $37 to $35.22 in a few hours of trading yesterday.

AstaZeneca stock dipped 7.69% on the news. Chart from Tradingview.

Pfizer stocks also dipped 2.78 percent on the news, falling from $42.80 to $42.36.

Pfizer stocks also dipped 2.78%. Chart from Tradingview.

Of the rest, Johnson & Johnson was the smallest loser, recording a price dip of 0.29 percent from $129.50 to $128.31.

Johnson & Johnson stock only dropped 0.29%. Chart from Tradingview.

Last modified (UTC): January 16, 2019 05:41

David Hundeyin @DavidHundeyin

I am a busy Nigerian writer, journalist and writer with an interest in tech and finance. When I'm not contributing to CCN and traveling around Africa, you can catch me contributing to CNN Africa, or in the writers room at 'The Other News', Nigeria's weekly answer to 'The Daily Show' with nearly 2 million viewers. My work on 'The Other News' was featured in the New Yorker Magazine, and that was then cited in the Washington Post so I'm not sure that counts as a feature but I'll definitely mention it too! I have been nominated by the US State Department to take part in the 2019 Edward R. Murrow Program for journalists under the International Visitors Leadership Program. I also like hamsters. You can reach me on Twitter at _David_Hundeyin