ig pharmaceutical companies were on the hot seat at Capitol Hill today with CVS Health, Cigna, Prime Therapeutics, Humana, and UnitedHealthcare’s OptumRx testifying before the Senate Finance Committee on the rising cost of prescription drugs.
Among the topics discussed included rebates paid by drug makers contributing to the high costs and the drug industry’s pursuit of profits–all to shift the blame from the pharmaceutical companies to the drug makers. U.S. President Donald Trump has already lambasted the pharmaceutical industry for the rising costs associated with prescription drugs.
“Pharmaceutical manufacturers insist that drug price increases are driven by rebates. This is simply not true,” CVS Health Executive Vice President Derica Rice said in a written testimony.
However, industry experts feel that government pressure to lower the cost of prescription drugs is simply par for the course and that drug companies will simply move forward even if prices do eventually come down as a result of governmental regulation.
“A major factor contributing to the increase in drug spending is the list price of prescription drugs. Drug manufacturers alone set the list price of prescription drugs,” said William Fleming, president of health-care services at Humana. “Drug manufacturers raise list prices to boost their revenue.”
In the video below, Aditya Khemka, fund Manager at DSP Investment Managers, breaks down the pharma sector from a portfolio perspective. Khemka, who was previously with Glenmark and tracked the pharma and health sectors at Lehman Brothers and Nomura, provides crucial insights into the big risks, challenges and opportunities of investing in pharma stocks.
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