Pharma stocks plunged after federal prosecutors launched a criminal probe into their role in fuelling the opioid crisis

Associated Press

  • Drug stocks plunged on Tuesday after the Wall Street Journal reported that federal prosecutors have launched a criminal probe into whether pharmaceutical companies purposely allowed painkillers to spread through US communities, fuelling the opioid crisis.
  • Teva slumped 8%, Amneal dropped 10%, and Mallinckrodt, McKesson, and AmeriSourceBergen all fell by more than 3% after the drugmakers and distributors received grand-jury subpoenas, the Journal reported, wiping more than $US3 billion from their combined market capitalizations.
  • The investigators are assessing whether the companies violated the Controlled Substances Act, which is typically used to charge drug dealers, the Journal reported.
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Drug stocks plunged on Tuesday after the Wall Street Journal reported that federal prosecutors have launched a criminal probe into whether pharmaceutical companies purposely allowed painkillers to spread through US communities, fuelling the opioid crisis.

Teva slumped 8%, Amneal dropped 10%, and Mallinckrodt, McKesson, and AmeriSourceBergen all fell by more than 3% after the drugmakers and distributors received grand-jury subpoenas from the US attorney’s office in the Eastern District of New York, the Journal reported, citing regulatory filings. The stock drops wiped more than $US3 billion from the five companies’ combined market capitalizations.

The investigators are applying laws typically used to charge drug dealers, the Journal reported, citing people familiar with the matter. They are assessing whether the companies violated the Controlled Substances Act, which requires them to monitor certain drugs by reporting suspicious orders and pharmacy customers, and ensure compliance with the law, the Journal said.

Other drug companies are likely to receive subpoenas in the coming months, the newspaper added.

More than 400,000 Americans died from overdoses of legal and illegal opioids between 1999 and 2017, according to federal data. Most states and more than 2,500 city and county governments have filed lawsuits against drug companies, accusing them of aggressively marketing opioid painkillers and failing to stop them from flooding communities, the Journal said. Purdue Pharma, the maker of OxyContin, has already been forced into bankruptcy.

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