Mylan’s EpiPen Price Cut Could Set a Dangerous Biotech Precedent

Mylan is cutting the price of its lifesaving EpiPen product for needy users, in a move that could set a big precedent that other biotech companies will be forced to follow.

From CNBC:

Mylan on Thursday announced plans to boost access to its EpiPen Auto-Injector by expanding already existing programs for patients who are facing higher out-of-pocket costs.

The price of the EpiPen, a life-saving medication and delivery system for people with severe allergies, has increased more than 400 percent in the past decade.

Shares of Mylan rose more than 3 percent in premarket trading Thursday following the announcement. With the company under pressure from members of Congress and Democratic presidential hopeful Hillary Clinton, the stock lost 5.4 percent of its value on Wednesday.

Mylan’s move may open the floodgates for other biotech firms to follow suit and offer subsidies for in-need patients that rely on their products. That could mean the sector’s sky-high margins will begin to fall, and almost certainly bring share prices down along with them.

IBB-2016-08-25

The iShares NASDAQ Biotechnology Index ETF (NASDAQ:IBB), which plunged more than 3% on Wednesday, was up $1.16 (+0.41%) to $287.39 per share in premarket trading Thursday. The world’s largest biotech ETF has fallen about 15% year-to-date.

IBB is one of our picks to avoid if Hillary Clinton becomes president this fall.

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