Blockbuster prostrate-cancer drugs have lost sales since federal investigators started looking into charities that help patients cover pharmaceutical costs.
“Federal prosecutors in late 2015 started to investigate charities that provide financial assistance to Medicare patients, and at least six companies — including the top two prostate-cancer drugmakers, Johnson & Johnson and Pfizer Inc. — have received federal subpoenas seeking information about their dealings with the charities, according to securities filings,” The Wall Street Journal reported on Friday.
Drug companies donate millions of dollars a year to charities that help U.S. patients pay the out-of-pocket costs of medication. But pharmaceutical makers also benefit as patients fill their prescriptions while insurance covers most of the cost.
“Every $1 million donated to charities can lead to up to $21 million in sales for drug companies, according to Citi Research. Because very few companies make prostate-cancer drugs, they tend to donate proportionally more to these charities than manufacturers of other treatments do,” the WSJ reported.
Drugmakers decided to give away more of the drugs for free after limiting cash donations to the charities. That move led to a yearly decline of more than 10% for the two top-selling prostate-cancer drugs, J&J’s Zytiga and Pfizer’s Xtandi.
The companies “got scared and stopped funding the cancer-assistance programs,” Sanford C. Bernstein & Co. analyst Ronny Gal told the WSJ. “So instead, they gave the drug for free. When you give patients [a drug] for free, it comes off your sales number.”
U.S. regulators want a narcotic painkiller involved in the opioid epidemic off the market amid data showing people continue to abuse it.
The Food and Drug Administration said Thursday it asked Endo Pharmaceuticals to stop selling opioid painkiller Opana ER after concluding the drugs's risks outweigh its benefits. It was the first time federal authorities asked a pharmaceutical company to pull an opioid painkiller from the market.
Investors responded quickly by dumping the stock, and Endo shares plunged 13.4 percent to $11.93 in trading after U.S. markets closed.
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