Ariad Pharmaceuticals Inc. (Cambridge MA) continued to plummet Thursday (October 20, 2016) after Vermont Sen. Bernie Sanders and Maryland Rep. Elijah Cummings sent a letter to the company, demanding more information about its price increases for Iclusig, a drug used to treat the rare cancer, chronic myeloid leukemia.@ariadpharm stock plummets after Congressional inquiries about its price increases for #Iclusig Click To Tweet
Last week, Sanders tweeted about the price hikes for the drug, denouncing corporate “greed,” but then came the Congressional letter about a series of recent price hikes. The stock was up slightly before the letter was announced, then sank as much as 7%. It later recovered some of its losses and ended the day just slightly lower.
Sanders and Cummings are seeking answers about what they called Ariad’s “repeated and staggering price increases,” according to Bloomberg. The two congressmen have previously teamed on investigations into drug pricing, notably sudden increases in some generic drugs.
The company said in a statement that it “recognizes the high cost of innovative oncology drugs” and pointed to its $1.3 billion investment in research and development and its 1.4 billion in accumulated losses since the company was founded. Ariad said it was “fully committed” to developing cancer therapies for small, underserved groups of patients.
Ariad said it received the letter and plans to respond to Sanders and Cummings’ request.
The company drew fire after it raised the price of Iclusig for the fourth time in 2016 to a list price of nearly $199,000 a year according to CNBC. In the letter addressed to Ariad CEO Paris Panayiotopoulos, the two lawmakers said Ariad’s “outrageous sales tactics” show that the company is “more concerned with its profit than with its patients.” They asked Ariad to send the requested documents by November 4.
Attacking drug companies on Twitter has become part of some politicians’ playbooks, much to the chagrin of investors. Democratic presidential candidate Hillary Clinton clocked the whole Nasdaq Biotechnology Index last year with a solitary tweet condemning “price gouging.” Then in August, Mylan NV’s (Amsterdam) stock took a drubbing just minutes after Clinton called for the company to lower prices for its EpiPen emergency allergy shot.
The Food and Drug Administration originally approved Iclusig for a larger patient group in December 2012, but reports of “serious and life-threatening blood clots“ and other side effects led to a temporary sales suspension. When Ariad was given the go ahead to resume sales the following year, the FDA specified that the drug could only be sold to a smaller patient subset.
Following Sanders’ comments, Ariad said in a statement “our pricing reflects our significant investment in R&D, our commitment to the very small, ultra orphan cancer patient populations that we serve and the associated risk with research and development.”
The FDA limited Iclusig only to chronic myeloid leukemia patients who have a genetic mutation that makes them resistant to other treatment options. Sales of the drug almost doubled to $65 million in the second quarter from the previous period. Ariad has been striving to turn the corner under its new CEO following losses each year from 2011 to 2015.
Unfortunately, Ariad now joins Valeant Pharmaceuticals International Inc. and pharma executive Martin Shkreli, former CEO of Turing Pharmaceuticals, as the latest target in Democrat Cummings’ crosshairs. Lawmakers have recently turned their attention to drug pricing practices in the pharmaceutical industry, excoriating big price hikes at Valeant, Touring and Mylan, among others.
Ariad closed Thursday at $10.78, down 24% from the start of its descent Oct. 10. More than 16.27 million shares traded hands Thursday versus the 30-day average volume of 7.26 million shares.
Steve’s Take: Growing up, I recall gazing out the car window, sitting in the back of my parent’s Packard on our annual summer pilgrimage from Washington DC to New England, to visit our family’s Irish and Ukrainian relatives. As the miles passed I was fascinated by the innumerable roadside hazard signs; you know, the ones without words.
The sign that comes to mind now as I cover this drama of “Pharma Culprit of the Month” is the one depicting the silhouette of a car, evidently swerving out of control because of the squiggly lines.
For drugmakers I picture the same danger sign, but with the image of a mortar and pestle swerving out of control. The message: “Woe to those who make conspicuous, outrageous price increases. You’ll wind up on the front page of The New York Times.”
As drug-price disgraces continue to grow, with Mylan’s EpiPen the most egregious perpetrator to date, pharma observers and patient groups, politicians and us journalists all pour over the media coverage, eyes peeled for the next offender.
Earlier this month, Forbes spotted a mammoth increase at Lannett Co., a small Philadelphia drugmaker that made Fortune’s list of fastest-growing companies last year. In fact, it was the fastest-growing drugmaker in the industry, according to Fiercepharma.com.
Most recently, the focus has shifted to Ariad Pharmaceuticals, which sells a cancer drug called Iclusig. Not at all bashful, and despite the uproar this year, Ariad boosted the drug’s price four times, beginning in January. Although the individual increases were all in the single digits, they added up to a 39% ascent year-to-date.
Some observers, such as StatNews, are terming it “Bernie Sanders vs. Ariad Pharmaceuticals, Act Two.” But the plot is even more insidious than devulged so far in the mainstream media.
In addition to the rash of price hikes, according to Pharmalot, the company also took steps to jack-up Iclusig profits by restricting patient choices. Ariad effectively doubled the price of its 15 mg tablet. Until September 2014, a two-month supply, which was 60 tablets, carried a list price of $10,350, but Ariad discontinued sales of this quantity. Instead, the company began charging the same price for 30 tablets of the 15 mg dose. Ariad also reportedly discontinued sales of its 30 mg tablet.
It’s truly ironic, don’t you think, that the Iclusig price hikes began a year after the FDA forced a labeling change that restricted usage to a smaller patient population. In December 2012, the US Food and Drug Administration approved Iclusig for patients who did not respond to other treatments.
But reports of life-threatening blood clots prompted the agency to ask Ariad to suspend sales. Two months later, the FDA allowed sales to resume, but limited them to only certain patients with a genetic mutation that made them resistant to other drugs.Steve's Take: Drugmakers pay attention to the new hazard sign-raise prices at your own risk Click To Tweet
The takeaway for all drugmakers is: pay attention to the new hazard sign, the one with the squiggly lines behind the mortar and pestle. If you’re going to risk eye-catching price increases, Valeant, Mylan and now Ariad are keeping the congressional hot seat plenty warm for whoever’s next.