The sun shone brighter than usual on California's largest biotech last month. Shares of Amgen, Inc. (NASDAQ: AMGN) rose 10.2% in June, according to data from S&P Global Market Intelligence. It wasn't their intention, but separate actions from the FDA and the Trump administration eased some investor concerns.
Continue Reading Below
Neulasta, Amgen's anemia drug for cancer patients, earned its first approval 15 years ago. The threat of biosimilar competition for the aging product has been looming, presenting a big worry for Amgen since Neulasta generates roughly 23% of the company's total product sales . Amgen received a reprieve on June 12 when the FDA rejected an application for CHS-1701, a copycat version of Neulasta being developed by Coherus Biosciences Inc.
About a week later, a draft of an executive order from the Trump administration alleviated fears that the president would make good on promises to limit biopharma's pricing power. In fact, it looks as if the present administration might grant Amgen and its industry peers a few wishes.
One proposal within the draft executive order aims to beef up intellectual-property protections for drugs sold outside America's borders, an industry sore spot that would have been addressed by the now defunct Trans-Pacific Partnership trade agreement.
The draft order also aims to roll back the 340B drug discount program. The 25-year-old program requires Amgen and its peers to provide certain drugs to certain healthcare providers at reduced prices. Over the years plenty of lobbyists, and a handful of lawmakers, have complained that some healthcare providers are in effect profiting from the program at drugmakers' expense.
Neulasta and several other Amgen products are sold at a discount through the 340B program. The company doesn't disclose how much of its product revenue stems from 340B eligible purchasers, and it certainly doesn't disclose just how heavily its drugs are discounted from their list prices. It's hard to see how ending the 340B program would lower overall spending on prescription medicines, but its cessation would almost certainly bolster Amgen's bottom line to some degree.
10 stocks we like better than AmgenWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Amgen wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of July 6, 2017