Biotech Stocks Plunge After Hillary Clinton Posts ‘Price Gouging’ Twitter Message

GettyImages-488773802 — Democratic presidential candidate Hillary Clinton speaks during a community forum on substance abuse Sept. 17, 2015, in Laconia, New Hampshire. Clinton said Monday she wants to battle “price gouging” by specialty drugmakers, sending biotech stocks plunging. Darren McCollester/Getty Images

Consider the power of a mere tweet. Biotechnology stocks plunged Monday after Hillary Clinton, the Democratic front-runner for president, accused drugmakers of “outrageous” price gouging.

On a day when U.S. stocks were headed toward gains for the session, biotechnology stocks were down considerably, and the movement began after Clinton’s Twitter post at 10:56 a.m. EDT.

Price gouging like this in the specialty drug market is outrageous. Tomorrow I'll lay out a plan to take it on. -H https://t.co/9Z0Aw7aI6h
— Hillary Clinton (@HillaryClinton) September 21, 2015

The iShares Nasdaq Biotechnology exchange traded fund, which measures the performance of 144 Nasdaq-listed biotech firms, plunged about 5 percent. Meanwhile the Standard and Poor’s 500 Index of biotechnology-listed stocks was down more than 3.4 percent. That represents about $15 billion from the value of the industry.

0002b — Biotech stocks on the S&P 500 Index fell more than 3 percent on Monday while the total index was up slightly. The separation between biotech stocks and the rest of the S&P 500 began after Hillary Clinton posted a tweet (red arrow) Monday morning pledging to go after price gouging in the specialty drug market. Fidelity Investments

Clinton’s Twitter post was inspired by an article Sunday’s New York Times about steep markups in older so-called specialty drugs used to treat rare conditions in a small number of patients. The article focused on a drug called Daraprim, which was acquired in August by Turing Pharmaceuticals.

The start-up founded by a former hedge fund manager Martin Shkreli immediately raised the price of the drug to $750 a tablet, from $13.50, boosting the cost to patients (and their insurers) by hundreds of thousands of dollars a year.

"This drug saves your life for $50,000," Shkreli said told Bloomberg an interview in New York City. "It is still a bargain for health insurers. At this price, it is a no-brainer."

0001b — The iShares Nasdaq Biotechnology ETF, which measures the performance of 144 Nasdaq-listed biotech firms, fell about 5 percent on Monday after Clinton's Twitter post. Thomson Reuters/IBTimes

Last month, the Infectious Disease Society of America sent a letter of complaint to Turing Pharmaceutical saying the Daraprim price increase was “unjustifiable for the medically vulnerable patient population” and “unsustainable for the healthcare system.”

Daraprim, known generically as pyrimethamine, is used to treat a parasite infection that can be life-threatening to newborns and people with compromised immune systems, like AIDS patients. "Price gouging like this in the specialty drug market is outrageous," Clinton tweeted. "Tomorrow I’ll lay out a plan to take it on."

Election 2016 Hillary Clinton