There has been a recent outcry on social media, focusing on drug pricing. This is likely to draw attention to the role of pharmacy benefit managers (PBMs) in drug pricing. One of the leading Democratic presidential candidates, Hillary Clinton, tweeted about the recent price gouging on an old drug and had a negative impact on the biotech stocks.

However, as the discussions on the topic continue, Oppenheimer believes PBMs will come into the discussion. PBMs continue to play a key role in gaining considerable pricing discounts for the patients and sponsors, and they are expected to play a significant role to counterbalance the oncoming trend of high-cost specialty Rx mix in drug spending.

The current attention is a near-term positive for CVS Health Corp. (NYSE: CVS) and Express Scripts Holding Co. (NASDAQ: ESRX), but at the same time, any regulatory changes around pricing could limit the impact PBMs could have on pricing discounts.

Oppenheimer has an Outperform rating for CVS with a $122 price target, and also a Perform rating for Express Scripts.

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In the report, Oppenheimer said:

Hillary Clinton’s comments bring drug pricing to the political debate and could be in the mainstream debate/news as the political setting draws toward nominations and presidential elections next year. Hillary Clinton tweeted denouncing the price gouging in drug pricing piggy backing on the New York Times article (“Drug Goes From $13.50 a Tablet to $750, Overnight” published on September 20) on Turing Pharmaceuticals. Turing acquired Daraprim, a 62 year old drug used for infections, and dramatically increased its price from $13.50 to $750 per pill. The New York Times article and Hillary Clinton’s comments have garnered significant social media attention. This attention on the practice of price gouging is likely to spill over to the Specialty Drugs, which are usually priced significantly higher, and could also draw focus to the roles of PBMs in drug pricing.

Any regulatory changes to drug pricing could elevate the role of the PBM industry but at the same time could limit the impact PBM players could have on the pricing, if pricing is controlled by regulations.

Shares of CVS were down 1.4% at $99.51 on Tuesday. The stock has a consensus analyst price target of $120.45 and a 52-week trading range of $77.40 to $113.65.

Express Scripts shares were down 1.8%, at $82.12 in a 52-week range of $68.06 to $94.61. The consensus price target is $99.30.

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