Since the advent of Facebook (FB) and Twitter (TWTR) , a losing verdict in the court of public opinion isn't just swift, it's instantaneous.
Social media has played a greater role by guiding Big Pharma watchdogs -- who have been on the prowl in hopes of shining a light on companies that have hiked drug prices by hundreds of percent -- toward companies that have provoked the public outrage of patients and family members.
Just look at Mylan's (MYL) recent EpiPen fiasco.
After catching the public ire's last week for raising prices on the popular allergy treatment (by roughly 480% to about $600 over the past eight years) Mylan said Monday that it will be rolling out a generic version of EpiPen at a roughly 50% discount from last week's prices. Mylan's CEO Heather Bresch also noted that the move was a reaction to "deep frustration" among the public surrounding EpiPen pricing.
The regulatory scrutiny in Washington began to mount this year when the U.S. Senate Special Committee on Aging said in March it was looking inside the "monopoly business model" that has produced "sudden price spikes" among decades-old drugs. Shortly afterward, the panel said it was poring through about 400,000 pages of documents subpoenaed by Turing and Retrophin -- a hedge fund and a biotech company formerly run by Martin Shkreli, who became notorious last year for jacking up the price of HIV-treatment Daraprim.
The panel was then quick to turn its sites on Valeant Pharmaceuticals (VRX) , the beleaguered Canadian drugmaker that's amassed about $31 billion in debt through years of credit-fueled acquisitions of companies and drugs whose prices were subsequently lifted to controversial levels. (Ousted Valeant CEO Michael Pearson, who was replaced by Joseph Papa this spring, apologized to the committee this April for putting Valeant shareholders ahead of patients.)
With political pressure mounting -- especially from the campaign of Democratic presidential nominee Hillary Clinton, who lambasted drugmakers for "price gouging" and "predatory" business models -- investors began to ask, "Who's next?"
And then the very same Senate panel, the Subcommittee on Aging, said Wednesday that it was seeking answers about Mylan's "drastic price increase" on its allergy treatment.
Those who follow social media (especially trending Twitter and Facebook news feeds) noticed when Brooklyn actress Mellini Kantayya uploaded a Petition2Congress.com link to "Stop the EpiPen Price Gouging" to her 800-some friends on Facebook, according to a Thursday New York Times report. It didn't take long for the petition to net more than 80,000 signatures, produce some fiery rhetoric from the Clinton campaign, and send Mylan running.
Grandchild w severe allergies needs life saving #Epipen. Cost has soared. Luckily we can pay the $600. Impossible for many scared parents— mia farrow (@MiaFarrow) August 23, 2016
When Martin Shkreli Calls A Pharma Company Out, You Know It Screwed Up #epipen https://t.co/LAJ8gNucna— Leo (@4eo) August 20, 2016
In 2007, an #EpiPen cost $57.— Roben Farzad (@robenfarzad) August 23, 2016
Today: $600. All for about $1 worth of injectable medicine https://t.co/MssBCkTH1H #Mylan
The lesson for investors is that some pharmaceutical companies may be more social-media-proof than others. Take Mallinckrodt's (MNK) Acthar Gel, which short-seller Andrew Left told Real Money is the lifeblood of the Irish drugmaker. "The company lives and breathes on Acthar," he said in a phone interview last week, noting that the multiple-sclerosis treatment is now listed at about $34,000 a vial from list prices of about $50 in the early 1990s.
While Left said that Mallinckrodt will undoubtedly be called to Capitol Hill, it has not received the same social-media scrutiny as Mylan's EpiPen. That may be because Mallinckrodt's drug doesn't have the wide reach that EpiPen has -- think of all those kids with peanut allergies.
Aside from Facebook and Twitter feeds -- which may prove to be the Achilles' heel to orphan drugs that have thus far slipped under the radar of watchdogs -- investors can easily track petitions that are beginning to gain momentum, as "Stop the EpiPen Price Gouging" has.
The most recent example is a plea for Congress to curb the costs of insulin, which is often packaged as a simple injectable device similar to EpiPen. Some of the primary producers of insulin devices used by diabetics include Novo Nordisk (NVO) , MannKind MNKD and AstraZeneca (AZN) .
#Pharma #PriceGouging should be a crime. Whether #Insulin #MS drugs #HIV #Hepatitis or #Cancer @chrissyfarr @MMaxwellStroud @missoulian— Al Colvin (@algcolvin) August 29, 2016
Patients with #diabetes struggle to afford #insulin -- https://t.co/LFGbaVMyRM #T1D— Faustman Lab (@FaustmanLab) August 29, 2016
"Insulin costs, like Mylan's EpiPens, have increased by over 400% in recent years," according to the the petition, which has triggered readers to send more than 20,000 letters to Congress as of Monday. "Americans pay the highest prices for insulin in the world," it continues. "People are unable to afford these prices, and are being forced to make difficult choices."
Today, drugmakers no longer have just regulators to worry about in protecting their pricing powers. And shareholders are beginning to learn the immediate public backlash on Twitter and Facebook is becoming a faster -- and more costly -- verdict.