Yesterday, as he bowed out of the race for the White House, Vice President Joe Biden talked about finding a cure for cancer in our lifetime.  It’s the kind of sound bite one would expect from any politician, but the timing is curious in the sense that there’s a vice grip on the drug industry and both political parties are coming down on pricing.

Most Hated Man - Most Hated Industry

Daraprim Pricing
Was $13.50	Then $700.00

The privately held Turing Pharmaceuticals got the ball rolling when it was revealed that the company bought a decades-old AIDS drug and immediately hiked the price from $13.50 to $700 a pill.  The outrage was swift and became harsher when the company CEO Martin Shkreli gave a callous interview that didn’t even attempt to justify the hike or nullify the criticism.

The price hike shocked most folks, but it was the laid-back and cavalier attitude that had the media calling Shkreli The Most Hated Man in America.

Donald Trump called Shkreli a “spoiled brat,” a “nothing,” and a “zero.” And he said that he should be ashamed of himself.

Marco Rubio went a little further to admonish the entire industry by saying, “These companies decide, we can get away with charging it, and so we do,” referring to the industry’s habit of marking up drug prices as demand wanes.  He went on to call the practice “pure profiteering.”  According to Bloomberg, drug price hikes are running rampant in the industry.

• Pfizer (PFE) hiked prices on 133 drugs
• Merck & Co. (MRK) hiked prices on 38 drugs

Democrats seeking their party’s nomination also went on the attack, but it was Hillary Clinton whose comments not only resonated the most, but also actually unmoored biotechnology stocks from their entrenched rally.

The former Secretary of State tweet sent biotech stocks lower:

September 21, 2015:

Price gouging like this in the specialty drug market is outrageous.  Tomorrow I’ll layout a plan to take it on.

At the time, shares of Valeant Pharmaceuticals (VRX) were changing hands at $229 a share; a week later, the share price was $158.  The stock rebounded to $182 by October 2, but this week after posting financial results that beat the Street on the top and bottom, management admitted it was making changes to its business model of buying abandoned drugs and capping price increases.

The stock was mostly a sitting duck when a major short issued a report with damming innuendos, sending the shares reeling to $88 before it was halted.  Management officials refuted the insinuations and actual allegations, helping the stock regain much of its lost footing.

Still, the die has been cast and VRX has become the poster child for the drug industry, which could possibly be taking over the top spot on the most hated list.

Yesterday, Hillary Clinton flexed her muscles again with comments about merger mania with healthcare insurers, saying she had “serious concerns.” The news sent shares of Aetna (AET), Cigna( CI), and Anthem (ANTM) reeling, although most recovered much of the lost ground.

Corporate Raider to the Rescue

It’s not just politicians looking to influence businesses, but activist Carl Icahn is announcing a Super Pac to change the rules for companies doing business outside America.  Carl Icahn is looking to stop American companies from heading abroad, while lowering taxes so they’ll bring their cash home.  This; of course, is a major political issue as it involves jobs and $2.2 trillion in foreign banks.  I get repatriation, but it’s not clear to me if this effort somehow is aimed at strong-arming that cash.  Involuntary repatriation worries me.  I get that Icahn is a capitalist, but he reminds me of the Sir Larry Wildman character in the Wall Street movie.

The corporate “greenmail” artist turned concerned citizens looking to build companies, not take them apart.

I could break you, mate, in two pieces over my knees. You know it, I know it. I could buy you six times over. I could dump the stock just to burn your arse. But I happen to want the company, and I want your block of shares. -Sir Larry Wildman

I do know if his letter to each member of Congress had a few of those lines… I would expect more from Bernie Sanders than someone looking to help corporations and America.

“I credit my success as an investor in large part to understanding markets and the motivations of large companies.  Companies have “interest.” They do not have “beliefs.”

It’s a worrisome to say the least; more politicians see a honey pot on corporate balance sheets as fair game.  I get that it is necessary to fund the giant Welfare Utopia, but it’s going to crush innovation and limit prosperity for all.

Yesterday’s Session

For most of yesterday’s session, the Dow held up even though it bounced around like a rag in the wind, only to stumble into the close after crude oil inventories came in more than twice consensus.

Leap of Faith Too Far

Last year, Magic Leap raised $542 million from investors, including Google.  Now, the company is raising $1.0 billion in a round that values it at $4.5 billion.

The company merges personal computing with human biology that creates a world of augmented reality.

Yes, it’s Leap-frog Virtual Reality 2.0, which hasn’t even hit the market yet.

It’s the kind of story that makes one think of a new world, where people no longer separate the real world from make-believe, but can it live up to the hype or is this leap of faith too much too soon?  Moreover, could this be the unicorn that bursts the Pixie Dust Bubble?

I’m not sure, but using good old-fashioned, two-dimensional thinking tells my gut that it’s a yellow flag for sure.  Still, the videos are cool.

https://www.youtube.com/watch?v=kw0-JRa9n94

https://www.youtube.com/watch?v=hvAer3EhCe4

Comments

like the song goes send in the clown paul on 10/22/2015 10:17:16 AM

The hearings will accomplish nothing. Joe K on 10/22/2015 10:37:14 AM

It will be a dog and pony show farrell on 10/22/2015 10:39:25 AM

The Benghazi hearings will just be another dog and pony show. Washington is starting to realize that Trump and Bernie are legitimate threats, and if they want Hildabeast elected they'd better not dig very deep. Mike H on 10/22/2015 11:06:53 AM

Really? You actually think there is a possibility of a serious investigation of a major screwup by a Demoncrat? In the last twenty years, there have been several FELONY issues involving Demoncrats and none of them has resulted in a serious investigation. How could anyone think that the party of incompetance and unaccountability that has gained an iron grip in Washington would allow any serious look, or that any Republican would ever get a backbone strong enough to attempt to restore rule of law and reason? Trump may be a jackass without a moral compass, but he is looking better and better as the only choice to break the hold that the DNC has and restore presidential politics to a contest using facts and reson rather than inuendo. Until the presidential campaigns are held accountable for the lies they tell, we have no hope of truth prevailing through a Congressional dog & pony show. Bob G on 10/22/2015 11:41:36 AM

We already know it will yield nothing significant and that no indictments are coming down on Hilary. How you may ask? We knew as soon as Joe Biden announced he is not running. He wouldn't have done that if they needed an insurance policy in the event Hillary might blow up. Ray Weldon on 10/22/2015 11:45:45 AM

Dogs and ponies all scripted. Patricia Flynn on 10/22/2015 12:29:33 PM

Dog&epony for the masses. Maybe a closed door hearing would eliminate some of and if & buts & Also the non necessary prose that shows politicians at their worst! Jim miller on 10/22/2015 4:28:08 PM

Dog & Pony show. If they were serious, she would already be in jail. Ernest Schocklin on 10/22/2015 5:47:09 PM

Will yield nothing! Right having hard time cornering her. E-mails most important now. Hated to see all the live's loss in Benghazi. This country needs Dr Carson! John zavisa on 10/22/2015 5:53:33 PM

YEE HAW !! w w on 10/23/2015 8:53:14 AM

They've shown us the dog and pony show, now what are we going to do with all this left over manure?? frank di costanzo on 10/23/2015 4:35:47 PM

of course it's a dog and pony show. But I keep hoping the FBI will come forward with criminal charges, even if she gets pardoned. mike T on 10/24/2015 9:05:55 AM

Nothing deters the Liberal mindset. Whether the Nation suffers or not. Frightening!!! gloria cato on 10/25/2015 9:23:08 AM

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