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Pharma Stock Roundup: Multiple Sclerosis Drug Prices in Focus, Mixed Data on BMY's Opdivo

Arpita Dutt

Pharmaceutical stocks were in the limelight this week with Merck's MRK CEO Ken Frazier resigning from President Donald Trump’s manufacturing council. The sector was also in the news with an investigation being launched into the rising prices of multiple sclerosis ("MS") drugs.

Recap of the Week’s Most Important Stories

Bayer, Novartis, Teva & Others Face MS Drug Price Probe: Drug pricing is back in the news with an investigation into the skyrocketing prices of MS drugs being launched by Rep. Elijah E. Cummings and Rep. Peter Welch. Letters have been sent to seven companies including Biogen, Teva, Roche, Novartis NVS, Merck KGaA, Bayer and Sanofi requesting information about their pricing strategies for their MS drugs. The letters have also raised the issue of “shadow pricing” – when an expensive new drug is launched or the price of an existing drug is raised, other companies follow suit and increase prices to match the higher prices.  According to an American Academy of Neurology study, annual sales of MS drugs doubled from $4 billion to almost $9 billion from 2008 to 2012.  Meanwhile, information provided by the National Multiple Sclerosis Society shows that the average wholesale price of MS disease modifying therapies was $16,000 in 2004 and shot up to $61,000 in 2013 and $83,688 in 2017. 

Mylan to pay $465M under DoJ Settlement: Mylan MYL announced that an agreement has been signed with the U.S. Department of Justice ("DOJ") and two relators regarding the Medicaid drug rebate settlement for $465 million. With this move, all claims relating to the classification of Mylan’s EpiPen Auto-Injector and EpiPen Jr Auto-Injector for purposes of the Medicaid Drug Rebate Program have been resolved. EpiPen, which was listed as a non-innovator drug, will be reclassified. Mylan said that it also entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services (Also read: Why Did Mylan Stock Surge Today?).

Broader Label for AstraZeneca/Merck’s PARP Inhibitor: The FDA expanded the label of AstraZeneca AZN and Merck’s PARP inhibitor Lynparza for ovarian cancer. A new tablet formulation was also approved as maintenance treatment for women with platinum-sensitive recurrent ovarian cancer regardless of BRCA-mutation status as well as for use beyond the third line setting in BRCA-mutated ovarian cancer. The approval of the tablet formulation will provide patients with a convenient dosing option as they can take 2 tablets twice daily instead of 8 capsules twice daily. AstraZeneca and Merck are both Zacks Rank #3 (Hold) stocks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Pfizer Gets FDA Nod for Targeted Cancer Drug: Pfizer PFE gained FDA approval for Besponsa providing a new treatment option for adult patients with relapsed or refractory B-cell precursor acute lymphoblastic leukemia (ALL), an aggressive type of blood cancer with poor prognosis in adults. According to information provided by Pfizer, the 5-year overall survival rate for patients with relapsed or refractory adult ALL is less than 10%. Besponsa’s approval path in the U.S. included a Breakthrough Therapy designation and priority review. Although the label comes with a black box warning for hepatotoxicity, this should not impact uptake given the poor survival rate for this patient population. EU approval for Besponsa came earlier this year in June.

Bristol-Myers’ Opdivo Combination Disappoints in Kidney Cancer Study:  Bristol-Myers Squibb’s BMY Opdivo failed to meet one of the co-primary endpoints in a late stage study evaluating the PD-1 immune checkpoint inhibitor plus Yervoy versus Sutent (sunitinib) in intermediate and poor-risk patients with previously untreated advanced or metastatic renal cell cancer. The Opdivo-Yervoy combination met the objective response rate co-primary endpoint (41.6% versus 26.5%) but failed to show statistical significance for progression-free survival. The third co-primary endpoint of overall survival is yet to mature. Opdivo is approved for second-line renal cell carcinoma and positive data from this study would have helped support label expansion into the first-line setting. With the study ongoing for overall survival data, hitting this co-primary endpoint could support label expansion (Also read: Bristol-Myers Opdivo Fails Kidney Cancer Trial CheckMate-214). Bristol-Myers stock has lost 2.9% of its value year to date versus the 11.2% gain of its industry.


Large Cap Pharmaceuticals Industry 5YR % Return

Large Cap Pharmaceuticals Industry 5YR % Return

The NYSE ARCA Pharmaceutical Index declined 0.3% over the last five trading sessions. Among major stocks, Glaxo GSK was up 0.4% while Lilly lost 4.6%. Over the last six months, J&J was up 13.4% while Merck declined 4.1% (See the last pharma stock roundup here: Mylan Misses, Perrigo Tops in Q2, Zynerba Plunges on Study Failure).

What's Next in the Pharmaceutical World?

Watch out for the usual pipeline and regulatory updates.

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Astrazeneca PLC (AZN) : Free Stock Analysis Report
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