Drug Supply Chain Stocks Dip After White House Recommendations on Drug Pricing

Drug supply chain stocks headed lower on Friday, Feb. 9, following the release of a report from the White House Council of Economic Advisers on how the government can help bring down drug prices.

"The document includes many suggestions which have been bandied about for years, including moving drugs paid for under [Medicare Part B] to [Medicare Part D], changing how pricing data is reported, point of sale rebate adjudication, reducing generic drug costs, [enhancing pharmacy benefit manager] competition and driving faster approval of generic drugs and biosimilars," RBC Capital Markets LLC analyst George Hill wrote in a note.

Hill pointed out that it is a "very long process from proposal to policy. Few of these proposals are new, with consequences that are well understood; thus we see the likelihood of dramatic change as low."

Nevertheless, shares of pharmacy benefit manager Express Scripts Holding Co. (ESRX) closed down 2.2% on Friday at $71.71 amid volatile trading in the broader stock market.

As for drug distributors, shares of AmerisourceBergen Corp. (ABC) closed down 2.6% at $89.19 and shares of McKesson Corp. (MCK) dropped 0.9% to $148.93. Cardinal Health Inc. (CAH) ended in the green, up 0.1% to $66.72.

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