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Shares of biotech Medivation ( MDVN ) tumbled Tuesday, a day after Congress attacked the pricing of its lead drug and the company hired a new CFO. Late Monday, the press picked up a letter from six U.S. representatives and six senators, including Democratic presidential candidate Bernard Sanders, to the head of the National Institutes of Health (NIH) urging the agency to exercise its “march-in” right to lower the price of Medivation’s prostate-cancer drug Xtandi. “The 1980 Bayh-Dole Act gives federal agencies, including the NIH, the authority to license a patent when ‘action is necessary to alleviate health or safety needs which are not reasonably satisfied’ or if the invention is not ‘available to the public on reasonable terms,’ ” the letter noted. “Price can be a clear barrier to access for consumers, and despite the law being in place for over 35 years, the NIH has never used this broad and powerful authority to protect consumers from excessive prescription drug prices.” The letter went on to say that Xtandi, which is sold by Medivation’s partner Astellas, costs $129,000 in the U.S. but less than a third of that in Japan, Sweden and Canada. The letter urged the NIH to hold a public hearing on Xtandi and its pricing. A similar hearing in 2004 led Abbott Laboratories ( ABT ) to lower the price of its AIDS drug Norvir for Medicaid and the AIDS Drug Assistance Programs, it said. The NIH did not actually use its march-in authority for that, however, and in 2013 sent a letter to advocates explaining why it thought such a move would be inappropriate. UBS analyst Matthew Roden pointed out that only a minority of Xtandi prescriptions are covered by Medicaid, “though worst case, dual eligibles (i.e. for both Medicare and Medicaid) could be impacted.” Roden estimates that about 75% of Xtandi sales are paid for by Medicare, and perhaps 20% of those are dual eligibles. Is $129,000 A High Price For A New Cancer Drug? The letter represented the latest salvo in politicians’ recent war on high drug prices, and something of a change in focus. While the recent attacks on Valeant Pharmaceuticals ( VRX ) and Turing Pharmaceuticals focused on steep price increases in old, neglected generic drugs, Xtandi is an innovative product that just launched in 2012. Its price is not exceptionally high for a new cancer drug: For instance, Bristol-Myers Squibb ‘s ( BMY ) Opdivo and Merck ‘s ( MRK ) similar drug Keytruda, both launched late in 2014, are going for about $150,000 a year. Meanwhile, Medivation also said late Monday that it had hired Citigroup ( C ) manager Jennifer Jarrett as its new CFO, replacing Rick Bierly who will retire in July. Analyst Roden wrote that Jarrett brings buyout expertise to the company, which may in turn dampen speculation that Medivation itself will be bought. In morning trading on the stock market today , Medivation stock was down 10% near 37. The growth of Xtandi has given the company a healthy IBD EPS Rank of 78, while the stock had been recovering after hitting a two-year low on Feb. 9. It has a weak Relative Strength Rating of just 22, so the stock has performed among the lowest 22% of all stocks over the past 12 months. Scalper1 News
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