Bristol Myers Squibb (NYSE:BMY) is reportedly filing a lawsuit against the U.S. government concerning the drug price negotiation program. This program was introduced last year as a component of the Inflation Reduction Act to address the issue of escalating drug prices. Notably, BMY’s lawsuit marks the third legal action related to this program.
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The drug pricing program grants the Department of Health and Human Services (HHS) the authority to negotiate lower drug prices with pharmaceutical companies. Bristol Myers Squibb contends that this power violates the First and Fifth Amendments of the U.S. Constitution. The company argues that being compelled to sell drugs at prices determined by government agencies infringes upon their rights.
Additionally, BMY has announced that its blood thinner drug, Eliquis, will undergo price negotiations later in 2023. Eliquis is a significant revenue generator for the company, with approximately $12 billion in revenue generated in 2022. It represents around 25% of BMY’s total sales.
The company aims to prevent federal agencies from engaging in drug price negotiations. Notably, last week, Merck (MRK) filed a lawsuit against the government on similar grounds. Furthermore, the U.S. Chamber of Commerce has filed a separate lawsuit against the Department of HHS regarding the program. These legal actions highlight the growing resistance and concerns within the pharmaceutical industry regarding the drug pricing program.
Is Bristol Myers Squibb Stock a Buy?
BMY demonstrates promising revenue growth prospects due to the successful commercial performance of several of its drugs. Additionally, the company has initiated Phase 3 programs for certain pipeline drugs, indicating potential future success. Further, the reduced debt level and the company’s attractive dividend yield of 3.4% are encouraging.
Currently, analysts have a Moderate Buy consensus rating on BMY stock. This is based on four Buy, three Hold, and one Sell recommendations. The average price target of $77.63 implies 17.3% upside potential from the current level. The stock is down 7% so far in 2023.
As per TipRanks data, the most accurate and profitable analyst for BMY is William Blair analyst Matt Philips. Copying the analyst’s trades on this stock and holding each position for one year could result in 81% of your transactions generating a profit, with an average return of 13.28% per trade.
