U.S. prosecutors subpoenaed Valeant Pharmaceuticals International (NYSE: VRX), reinvigorating the drug pricing drama. However, the broader pharmaceutical space and sector-related exchange traded fund were shaking off the renewed pricing scrutiny Thursday as the industry rebounded along with the markets.
The U.S. Attorney’s Office in Massachusetts and another from the Manhattan U.S. Attorney’s Office sought information on Valeant’s patient assistance programs, drug distribution and pricing decisions, Bloomberg reports.
The federal prosecutors will likely refocus attention on the high cost of medicines. For instance, the U.S. House of Representatives have highlighted Valeant’s heart drugs Nitropress and Isuprel, which have seen prices jump by 212% and 525%, respectively, on the day Valeant acquired the rights to sell them. Shares of VRX plunged as much as 12% early Thursday in response to the federal review.
“We will continue to see headlines around drug pricing reform, especially as this is an election year,” Mirjam Heeb, a health-care fund manager at GAM Investment Management, told Bloomberg. “It’s a headwind that will keep popping up.”
Meanwhile, the Market Vectors Pharmaceutical ETF (NYSEArca: PPH) was up 1.2% Thursday. PPH includes a 3.7% position in VRX. PPH, though, was still falling behind the broader biotech space, with the iShares Nasdaq Biotechnology ETF (NasdaqGS: IBB) 2.3% higher mid-day.
Pharmaceutical and biotechnology stocks have been under pressure ever since presidential hopeful Hillary Clinton stated that she would tackle the sky-rocketing drug prices. [Clinton Delivers Poison Pill To Biotech ETFs]