Novartis Comes Under Fire: Consider Newer Startup Imprimis Instead

Rising Drug Prices Bring Negative Headlines

Novartis Pharmaceuticals (NYSE: NVS) is one of a string of pharmaceutical companies that have recently come under fire for what appears to be the arbitrary raising of prices, a move viewed by the public as being evident of rampant price-gouging in the industry. Many historically cheap generic drugs have increased in price by many times in just the last year. While Novartis and other drug-makers insist they have good reason to raise the prices, their reasoning appears to be little supported by the evidence. As people struggle with the increased costs of healthcare in general, rising drug prices have increased the public’s ire about the pharmaceutical companies who have raised their prices. As the Wall Street Journal pointed out, Novartis’s price increases for skin conditions have far outpaced inflation, making the medications unaffordable for many who need them.

One example is clobetasol, a generic medication used to treat very common skin conditions such as eczema. Novartis significantly raised the price of this generic drug, causing a lot of anger. In response, other companies offering the same generic medication did the same, resulting in spiraling upward costs to the consumer.

Political Backlash

The backlash against companies like Novartis drastically increasing the prices of generic drugs is not limited to the general public alone. Politicians, both in Congress and in this election cycle, have seized on the issue. It is likely that governmental regulation will be implemented to control how these drugs are priced. This could have a very negative impact on the stock prices for Novartis and other drug companies that have engaged in this sort of activity. As the problem seizes the public imagination, it has increasingly become a bipartisan issue, making new regulations likely within the next year or two.

Comparison With Competitors

Novartis share prices are falling, as are those of other pharmaceutical companies who have been in the news for drastically raising prices of generic drugs.

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Author: Travis Esquivel

Travis Esquivel is an engineer, passionate soccer player and full-time dad. He enjoys writing about innovation and technology from time to time.

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