Early polling suggests Proposition 61 will easily pass in California on November the 8th, with 50% already in favor of it, compared to a meager 16% saying they’d vote no. If passed, it will permit the State of California to negotiate costs for the 3 million Medi-cal patients, 830k state employees and retirees, in addition to another 294k teachers.
For now, the ordinary, non-warden of the state, will not enjoy the splendour of prop 61. But it’s a start.
RBC analyst, Mike Yee, says it’s mostly headline risk and should only affect earnings by 2-3% — due to the limited scope of the porgram.
In a note to clients, RBC Dominion Securities Analyst Michael Yee indicated the passage of this measure could adversely affect all the biotech companies in his coverage universe, including Amgen Inc., Gilead Sciences Inc., Celgene Corp., Biogen Inc., Regeneron Pharmaceuticals Inc., and Vertex Pharmaceuticals Inc. However, Yee doesn’t think this measure would have a materially deleterious effect on pharmaceutical companies’ financial performance.
“We think a possible 2-3 percent earnings per share impact to large-caps if this initiative were passed across all 50 states, but this is more headline risk than anything,” the analyst wrote.
Nevertheless, this could be a keystone event that leads the way towards other states making a stand against big pharma. In spite of their efforts in California, outspending the people by a factor of 7, higher drug prices for the benefit of a few C level execs and company share buyback just isn’t resonating with the people.
“After $35 million spent (so far by opponents) on lying ads … it’s gotten them 16 percent of the vote,” Weinstein said of the David-and-Goliath battle that has seen Big Pharma spend at least $86 million to defeat the measure. In contrast, the proponents have raised at least $14 million.
Speciality pharma stocks MNK, MYL, ALKS, ENDP, VRX, ALNY and a sundry of other pharma stocks were pummeled today.