Drug industry to stabilize prices in 2017, sends pharma stocks plunging

A number of drugmakers, wholesale distributors and pharmacy-benefit managers saw their stocks slump on Friday after several drug companies indicated they will not raise prices as sharply as in past years, according to The Wall Street Journal.

While this news represents a win for patients and insurers, some analysts and investors are concerned price moderation may impact profits for drug companies and middlemen, WSJ reported.

Amgen's shares fell 10 percent on Friday after the company announced Thursday it would not significantly raise the price of its best-selling arthritis drug Enbrel, which produced strong sales in the last few years due to multiple price hikes.

The Thousand Oaks, Calif.-based drugmaker said its less aggressive pricing strategy stems from the need to pay higher rebates to the PBM's, which will help ensure drug plans continue to reimburse patients using Enbrel.

"We'll be driving the business on volume, not on net selling price next year," said Anthony Hooper, chief of commercial operations for Amgen.

McKesson, a large wholesale drug distributor, lost a fourth of its market value on Friday — about $9 billion — after reporting lower profits for the fiscal year 2016. The San Francisco-based distributor pinpointed tough competition and a slowdown in price inflation for brand-name drugs as the sources of its lower profits.

"We have made a very significant change in our pricing practice to match where the market is today," John Hammergren, CEO of McKesson, told analysts Thursday during a conference call.

Shares of McKesson's largest competitors —AmerisourceBergen Corp. and Cardinal Health — also fell 13 percent and 12 percent, respectively, according to the report.

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