Analysts Deliver Good News and Bad News on Drug Pricing

The specter of drug price controls in the US has reared its head on a regular basis during the presidential primary election campaign and has pummeled biotech stock prices. But last week Leerink Partners’ analyst Geoffrey Porges offered a glimmer of a light at the end of tunnel in his recent research note.

 Porges wrote “despite the rhetoric of campaigns and candidates, and the recent actions of certain regulators, we believe the likelihood of fundamental adverse reform to drug coverage, purchasing, and pricing by the government is low.” Hopefully this message will hearten the markets in the short term.

 However, Piper Jaffray’s Joshua Schimmer points out in his recent note that co-pay assistance programs may be the next target of political and public frustration over the perceived high cost of specialty drugs.

 So while one pricing controversy may be subsiding, another is set to emerge. The lesson for the biotech industry should be that increased scrutiny is becoming an on-going reality for the industry. The fact that the sector has brought, and is bringing, products of such importance to the market ensures that the industry will remain in the cross-hairs of public officials, patient advocates and consumer watchdogs.