Drug stocks were regrouping on Monday following last Friday’s losses that came ahead of a Washington Post/60 Minutes report on America’s opioid crisis.
The sell-off came as it was widely expected that the feature would place some of the blame for the crisis on drug distributors, which ended up being the case. In the special report, former DEA Deputy Assistant Administrator Joe Rannazzisi told 60 Minutes’ Bill Whitaker that the opioid crisis has been aided in part by Congress, lobbyists and drug distribution companies. He noted that while blame has already been placed on the manufacturers of opioids, the drug distributors have faced less scrutiny.
Shares of these companies rebounded on Monday, however, after Cowen issued a note downplaying the impact on distributors. Lead analyst Charles Rhyee said pressure on the companies are “overblown.” Rhyee noted that drug distributors put order monitoring systems in place in the mid-2000s following an investigation into improperly reporting suspicious orders.
He added that AmerisourceBergen (NYSE:ABC) has already paid $16 million, Cardinal Health (NYSE:CAH) has paid $20 million, and McKesson (NYSE:MCK) has paid $150 million to federal and state entities to settle the matter.