New Study Suggests Drug Prices Have Doubled Since 2011: What's It Mean For The Market?

Brand-name prescription drug prices have skyrocketed over the past five years, coming in twice as expensive as the prices in 2011.

Express Scripts Holding Company ESRX, the United States' largest pharmacy conglomerate, compiled the data and came to the initial findings regarding the price doubling.

"Express Scripts blamed the soaring cost of medicines on a class of drugs that is loosely known as ‘specialty medications,'" according to the Financial Times. Within this context, "specialty medications" are drugs used to treat "complex conditions such as rheumatoid arthritis and cancer" and come with a high price tag.

Source: Financial Times, Original From Express Scripts

While branded drugs have increased, driven by specialty medications, Express Scripts found that "the average price of generic medicines […] fell roughly 20 per cent last year."

Related Link: Hillary Clinton: "I'm Going After" Valeant

Broad Concerns

Despite the implicit pricing concerns, FT highlighted how the study brings into context political implications as well.

During this year's presidential race, drug manufacturers have come under scrutiny from all sides, with presidential hopeful Hillary Clinton campaigning an "attack" on Valeant Pharmaceuticals Intl Inc VRX and its specific price hikes, and Donald Trump proposing Medicare should have the freedom to negotiate pricings for medications.

Against this backdrop, FT commented, "Fears that the candidates will follow through on their promises with a crackdown on drug prices have contributed to sharp sell-off in pharmaceuticals and biotech stocks in recent months."

"The Nasdaq biotech index has lost roughly a third of its value since September, when Mrs. Clinton pledged to crack down on price ‘gouging' in a tweet," according to FT.

At Time Of Writing…

• Valeant was down 38.88 percent at $42.17.
• Express Scripts was down 1.33 percent at $70.00.
• iShares NASDAQ Biotechnology Index (ETF) IBB was down 3.04 percent at $253.49.
• ProShares Ultra Nasdaq Biotechnology ETF BIB was down 6.33 percent at $38.75.
• Market Vectors Pharmaceutical ETF PPH was down 3.20 percent at $58.00.