Is a senator’s social media account enough to scare Wall Street?
The stock price of pharmaceutical giant Eli Lilly dropped suddenly on Tuesday after Sen. Bernie Sanders (I-Vt.) criticized the rising price of the company’s insulin drug Humalog on Twitter.
Sanders tweeted his disapproval of the price of Humalog at 12:28 p.m. ET. The former Democratic presidential candidate attached an image from a Washington Post report on Monday showing that the drug’s price had risen from $21 to $255 in the past 20 years ― a 700 percent increase when adjusted for inflation, according to the Post.
Immediately after, the price of an Eli Lilly share quickly went from $72.71 to $72.05 in fewer than 10 minutes. CNBC first reported the development.
Eli Lilly’s share price recovered promptly, but it nonetheless demonstrated the power of a single senator’s fury to move markets in an era of increasing political scrutiny of controversial corporate practices.
Sen. Elizabeth Warren (D-Mass.), a progressive ally of Sanders in the Senate, recently demonstrated the power of her bully pulpit to punish corporate misbehavior with her televised grilling of Wells Fargo CEO John Stumpf. Wells Fargo’s stock price could also be seen dropping in real time as Warren called on Stumpf to resign, return profits and be investigated for criminal misconduct.
Thanks to Warren’s pressure, Stumpf was forced to forgo $41 million in unvested stock, as well as his annual salary and bonus. Warren’s brainchild, the Consumer Financial Protection Bureau, along with other federal agencies, had caught Wells Fargo setting up accounts for customers without their knowledge and levied a record fine on the bank.
Warren, Sanders and other liberal lawmakers are already using scandals like these to signal that they plan to maintain the role of populist gadfly if Hillary Clinton occupies the White House.
But Sanders’ tweet also illustrates the particular challenge facing the pharmaceutical industry after a series of highly public drug price increases that have drawn negative attention to industry practices. Members of Congress from both parties had harsh words for Mylan CEO Heather Bresch in September after the company jacked up the price of a two-pack of the life-saving EpiPen from $100 in 2009 to $608.
And former Turing Pharmaceuticals CEO Martin Shkreli sparked widespread outrage in August 2015 when he raised the price of vital drug Daraprim to $750 per pill from $13.50. The drug is primarily used to treat toxoplasmosis, a parasite infection that can be fatal for pregnant women, and some AIDS and cancer patients who contract it.
Sanders has seized on popular discontent with these companies’ conduct to push for the government to use its power as an insurer to negotiate lower drug prices. He has campaigned for Proposition 61 in California, a referendum on the state’s general election ballot next Tuesday that would link the prices state agencies pay for drugs to what the federal Department of Veterans Affairs pays.
The VA, unlike Medicare and state-level health insurance programs, is authorized to use its power as a large insurer to negotiate lower drug prices.
Clinton, for her part, supports empowering Medicare to negotiate drug prices, capping consumers’ out-of-pocket drug costs and other reforms.
