Senator Bernie Sanders (I-VT) and Congressman Elijah Cummings (D-MD) delivered a letter to Ariad Pharmaceuticals (NASDAQ: ARIA) and its CEO Paris Panayiotopoulos on Thursday which blasted the company for consistently raising the price of its drug to treat myeloid leukemia called Iclusig.
When the company received approval from the U.S. Food and Drug Administration (FDA) in 2012 to sell its drug it did so for a price of $115,000 per year. However, the price has since risen more than $80,000 to its current price tag which is just shy of $200,000 per year.
Investors appeared to be unfazed by the letter which did cause an immediate sell-off.
After a copy of the letter was released to the public, Ariad’s stock lost around four percent and hit an intra-day low of $10.05. The stock quickly rebounded as investors swooped in to buy the stock at a bargain price relative to what it was trading at over the past few days.
Ariad’s stock recovered most of its losses and closed the day at $10.78, down 0.28 percent.
Shares are still higher by nearly 75 percent since the start of 2016 and more than 50 percent over the past year.
Investors were also encouraged by Ariad’s response in which it acknowledged receipt of the letter and will be responding to the information request. In the meantime the company offered a brief statement in which it “recognizes” the high cost of innovative oncology drugs and the importance and efficacy of its products.
Ariad added in its statement that it has invested more than $1.3 billion in research and development while simultaneously recording losses of around $1.4 billion since the company was founded. These costs and losses have yet to be recovered.
Ariad further pointed out in its statement that throughout 2015, Ariad’s revenue totaled $119 million and the company invested $171 million in research and development, representing 143 percent of revenue.
“After years of risk-taking and research, the Company has brought its first product to market serving a very small and seriously ill group of cancer patients,” the company said in its statement. “Ariad remains fully committed to developing critical therapies for unserved and underserved small patient populations suffering from rare cancers.”