September 5, 2018 Equity Research Drug Pricing Report: August 2018 Specialty Pharmaceuticals  As part of our Pharma’s Brave New World report series, each month we publish a Monthly Drug Pricing Report and in this report we review drug pricing data for August 2018. As we did with our previous reports, we have reviewed PriceRx data for August and we provide the data in several ways, including the top 50 price increases across all drug manufacturers. In addition, we provide a listing of the top price increases for a subset of 35 leading large cap and specialty companies.  The month of August was a relatively quiet one in terms of drug pricing action by pharma companies. The quiet month comes after an active July, recall that July began with Pfizer increasing price on approximately 10% of its portfolio and then subsequently rolled back the increases almost two weeks later after receiving criticism from President Trump. Pfizer also publically stated at the time that it would refrain from increasing prices for the remainder of the year, which was followed by similar declarations from Novartis, Merck, AstraZeneca, Roche, and Celgene, among others. We believe August essentially shows that President Trump’s criticism might be working and may have at least deterred some companies from raising price in the near-term and ahead of mid-term elections. We have highlighted this risk in our Brave New World report series a number of times.  In August, across all drug manufacturers, we found 60 products increased in price (vs. 110 increases in July), while 48 products decreased in price (vs. 32 decreases in July). The July figures do not count Pfizer’s price increases and subsequent rollbacks (decreases) in order to make the comparisons more accurate. The price increases ranged from 482% to 1.6%, with an average price increase of 53.0% and a median increase of 9.9%. We note that the largest percentage price increases are not on exceptionally low priced products, the average package price for the 50 products with the highest price increases was approximately $741. The 48 price declines ranged from approximately -1.5% to -88%, with an average decrease of -41.3% and median decrease of -38.6%. We have included the highest 50 price increases from this data in Exhibit 1 of this report. The 48 price decreases are included in Exhibit 2. Among the subset of 35 public Specialty and Large Cap companies, according to PriceRx, there were 7 price increases in August 2018 and 21 price decreases. The price increases ranged from 186.6% to 3.0%, with an average price increase of 38.1% and a median increase of 13.8%. These price increases and decreases are included in Exhibits 3 and 4.  Typically, the wholesaler acquisition cost (WAC) price reflects the list price. WAC price generally does not account for rebates or discounts that manufacturers provide payers and, since these discounts can be sizable, investors should not use WAC price increases as a precise size of potential sales increases. Is this a sign of high prices to consumers or bigger discounts to wholesalers, we cannot tell given the data.  The exhibits in this report cover the August 2018 WAC price changes sorted by percentage change. We also have a sortable excel spreadsheet of the data included in this report, so please let us know if you would like a copy. Please see page 5 for rating definitions, important disclosures and required analyst certifications. All estimates/forecasts are as of 09/05/18 unless otherwise stated. 09/04/18 22:47:21 ET Wells Fargo Securities, LLC does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of the report and investors should consider this report as only a single factor in making their investment decision. David Maris Senior Analyst 212-214-8026 david.maris@wellsfargo.com Katie Kerfoot Associate Analyst 212-214-8060 katie.kerfoot@wellsfargo.com Sameer Kandola Associate Analyst 212-214-5064 sameer.kandola@wellsfargo.com Jacob Hughes Associate Analyst 212-214-8011 jacob.hughes@wellsfargo.com Equity Research Specialty Pharmaceuticals Exhibit 1. August 2018 PriceRx Data for All Active Drugs – Top 50 WAC Increases Product Name Labeler FLUoxetine HCl ALEMBIC PHARMACEUTICALS Nitrofurantoin Oral NOSTRUM LABORATORIES Irbesartan-Hydrochlorothiazide Oral Valsartan Effective Date $ Change % Change 8/2/2018 $180.72 482.18% 8/21/2018 $1,917.57 403.91% ALEMBIC PHARMACEUTICALS 8/2/2018 $35.22 320.77% Oral MACLEODS PHARMACEUTICALS 8/3/2018 $9.17 305.67% Thiamine HCl MARLEX PHARMACEUTICALS 8/1/2018 $24.68 274.22% DilTIAZem HCl AKORN 8/1/2018 $7.11 186.61% Ondansetron HCl HERITAGE PHARMACEUTICALS 8/13/2018 $0.46 100.00% Losartan Potassium ALEMBIC PHARMACEUTICALS 8/2/2018 $101.50 95.57% Fosphenytoin Sodium FRESENIUS KABI USA 8/20/2018 $100.40 80.58% Sertraline HCl AMERICAN HEALTH PACKAGING 8/22/2018 $0.11 68.75% Irbesartan Oral ALEMBIC PHARMACEUTICALS 8/2/2018 $12.74 67.48% LamoTRIgine Oral AMERICAN HEALTH PACKAGING 8/22/2018 $0.07 58.33% Gialax Oral PHLIGHT PHARMA 8/8/2018 $202.57 52.04% Anastrozole Oral AMERICAN HEALTH PACKAGING 8/22/2018 $0.30 49.18% Nitro-Dur Transdermal INGENUS PHARMACEUTICALS 8/1/2018 $128.76 49.00% ScarcinPad Sheet SA3 8/1/2018 $250.00 47.92% Ibuprofen Oral AMERICAN HEALTH PACKAGING 8/22/2018 $5.54 47.11% LETS Kit FAGRON 8/7/2018 $13.65 37.55% Ful-Glo Ophthalmic AKORN 8/20/2018 $3.60 31.58% Acyclovir Oral AMERICAN HEALTH PACKAGING 8/22/2018 $0.16 30.77% Hurricaine Mouth/Throat BEUTLICH PHARMA 8/8/2018 $2.01 27.76% Rifabutin Oral AMERICAN HEALTH PACKAGING 8/22/2018 $4.11 27.29% Lidocaine HCl INTRNTL MEDICATION SYSTEM 8/24/2018 $125.00 25.00% Phytonadione Injection INTRNTL MEDICATION SYSTEM 8/24/2018 $45.00 25.00% Procainamide HCl NEXUS PHARMA 8/6/2018 $100.00 16.00% Ery External PERRIGO PHARMACEUTICALS 8/7/2018 $10.07 15.00% Methadone HCl HIKMA 8/7/2018 $4.24 13.79% Clindamycin Phosphate FAGRON 8/7/2018 $6.65 13.75% Buprenorphine Transdermal RHODES PHARMACEUTICAL 8/1/2018 $32.19 11.99% Prandin Oral GEMINI LABORATORIES 8/1/2018 $64.98 9.90% Pyridium Oral GEMINI LABORATORIES 8/1/2018 $36.35 9.90% Zomig Nasal/Oral IMPAX SPECIALTY PHARMA 8/1/2018 $39.81 9.90% Dexedrine Oral AMEDRA PHARMACEUTICALS 8/1/2018 $172.93 9.90% Nizatidine Oral GEMINI LABORATORIES 8/1/2018 $41.54 9.90% Plexion External MISSION 8/20/2018 $54.47 9.90% Albenza Oral AMEDRA PHARMACEUTICALS 8/1/2018 $39.78 9.90% Activella Oral GEMINI LABORATORIES 8/1/2018 $20.95 9.90% Veltassa Oral RELYPSA 8/1/2018 $12.65 9.44% Doral Oral GALT PHARMACEUTICALS 8/1/2018 $202.00 9.40% Hydrocortisone Acetate GRAXCELL PHARMACEUTICAL 8/8/2018 $16.00 9.05% K-Phos No BEACH 8/15/2018 $7.30 8.54% Beelith Oral BEACH 8/15/2018 $4.70 8.54% K-Phos Oral BEACH 8/15/2018 $17.40 8.51% K-Phos-Neutral Oral BEACH 8/15/2018 $25.15 8.50% Tri-Luma External GALDERMA 8/1/2018 $15.55 8.32% Sustol Subcutaneous HERON THERAPEUTICS 8/13/2018 $247.74 7.75% Cotempla XR-ODT NEOS THERAPEUTICS BRANDS 8/7/2018 $22.38 7.00% Lenvima Oral EISAI 8/20/2018 $1,000.00 6.26% Paxil CR APOTEX 8/15/2018 $9.52 5.26% HepaGam B SAOL THERAPEUTICS 8/1/2018 $8.48 5.00% Source: MediSpan PriceRx Disclaimer: the attribution to CDI of the data from Price Rx in Wells Fargo Securities, LLC research notes does not constitute CDI’s endorsement of the data, views, opinions, or findings expressed, shared, or otherwise reported in Wells Fargo Securities, LLC research notes. Copyright (2018), Clinical Drug Information, LLC. 2 Wells Fargo Securities, LLC Equity Research Drug Pricing Report: August 2018 Exhibit 2. August 2018 PriceRx Data for All Active Drugs – All WAC Decreases Product Name Labeler Effective Date $ Change % Change Nystatin-Triamcinolone External TELIGENT 8/1/2018 ($43.90) (87.98%) Betamethasone Dipropionate PERRIGO PHARMACEUTICALS 8/2/2018 ($20.89) (84.40%) Lidocaine External TELIGENT 8/1/2018 ($125.00) (83.33%) Tetracaine HCl HUMCO 8/10/2018 ($448.48) (78.89%) Econazole Nitrate TELIGENT 8/1/2018 ($37.53) (75.02%) Clarithromycin Oral AUROBINDO PHARMA 8/1/2018 ($161.02) (74.20%) Acyclovir External TARO 8/1/2018 ($465.55) (72.96%) Desonide External PERRIGO PHARMACEUTICALS 8/2/2018 ($184.91) (71.97%) Gabapentin Oral ZYDUS PHARMACEUTICALS (USA) 8/10/2018 ($55.16) (70.38%) Atorvastatin Calcium DR.REDDY'S LABORATORIES, INC. 8/1/2018 ($38.62) (70.23%) Cefdinir Oral AUROBINDO PHARMA 8/1/2018 ($103.06) (67.33%) Diclofenac Sodium TELIGENT 8/1/2018 ($62.50) (62.50%) Erythromycin External PERRIGO PHARMACEUTICALS 8/7/2018 ($106.33) (59.63%) Multivitamin/Fluoride Oral H2 PHARMA 8/24/2018 ($17.88) (57.94%) DULoxetine HCl AJANTA PHARMA LIMITED 8/20/2018 ($22.00) (55.00%) Hemmorex-HC Rectal LASER PHARMACEUTICALS 8/24/2018 ($72.99) (54.88%) Clobetasol Propionate TARO 8/1/2018 ($78.60) (54.47%) Testosterone Transdermal PERRIGO PHARMACEUTICALS 8/2/2018 ($263.65) (51.08%) Memantine HCl LUPIN PHARMACEUTICALS 8/1/2018 ($3,056.00) (50.00%) Abelcet Intravenous LEADIANT BIOSCIENCES 8/1/2018 ($96.50) (49.11%) Tenofovir Disoproxil STRIDES PHARMA 8/13/2018 ($54.00) (46.96%) Clobetasol Prop TELIGENT 8/1/2018 ($21.58) (46.58%) KelaRx External STERLING KNIGHT PHARMACEUTICAL 8/15/2018 ($1,556.00) (43.95%) FluPHENAZine Decanoate PAR STERILE PRODUCTS 8/1/2018 ($56.76) (42.12%) Neostigmine Methylsulfate PAR STERILE PRODUCTS 8/1/2018 ($219.00) (35.04%) Ciclopirox External PERRIGO PHARMACEUTICALS 8/2/2018 ($41.83) (34.91%) Bloxiverz Intravenous NOVAPLUS/AVADEL LEGACY PHARMA 8/3/2018 ($96.80) (34.52%) Silipac External STERLING KNIGHT PHARMACEUTICAL 8/15/2018 ($1,695.00) (33.93%) HYDROmorphone HCl PERRIGO 8/2/2018 ($358.02) (31.74%) Entecavir Oral AUROBINDO PHARMA 8/1/2018 ($125.00) (31.65%) Bumetanide Oral EDENBRIDGE PHARMACEUTICALS 8/17/2018 ($291.74) (26.49%) Celecoxib Oral AUROBINDO PHARMA 8/1/2018 ($25.00) (23.81%) Morphine Sulfate AMERICAN HEALTH PACKAGING 8/13/2018 ($0.20) (23.53%) Clindamycin Phosphate TELIGENT 8/1/2018 ($4.30) (22.28%) Haloperidol Oral ZYDUS PHARMACEUTICALS (USA) 8/10/2018 ($46.18) (20.94%) Doxycycline Hyclate HIKMA 8/3/2018 ($15.00) (20.00%) Phentermine HCl KVK TECH 8/1/2018 ($2.45) (19.60%) PKU Air20 VITAFLO 8/1/2018 ($46.00) (18.55%) Methylphenidate HCl KVK TECH 8/3/2018 ($27.33) (16.24%) Vazculep Intravenous AVADEL LEGACY PHARMACEUTICALS 8/3/2018 ($7.63) (15.00%) Pregnitude Oral EXELTIS USA 8/1/2018 ($4.00) (13.33%) ARIPiprazole Oral AJANTA PHARMA LIMITED 8/20/2018 ($70.00) (12.28%) Methadone HCl HIKMA 8/7/2018 ($4.24) (12.12%) Desoximetasone External TARO 8/1/2018 ($46.00) (10.00%) Cefepime HCl APOTEX 8/6/2018 ($0.78) (5.23%) Emverm Oral IMPAX SPECIALTY PHARMA 8/1/2018 ($20.28) (5.00%) Hydrocortisone Acetate GRAXCELL PHARMACEUTICAL 8/8/2018 ($15.00) (3.71%) RaNITidine HCl AVKARE 8/8/2018 ($10.82) (1.48%) Source: MediSpan PriceRx Wells Fargo Securities, LLC 3 Equity Research Specialty Pharmaceuticals Exhibits 3 and 4 include price changes from the following subset of companies: AbbVie, Allergan, Amphastar, AstraZeneca, Bristol-Myers, Emergent Biosolutions, Flexion, GlaxoSmithKline, Impax, Ironwood, Jazz, Endo, Lilly, Mallinckrodt, Merck, Mylan, Neos, Novartis, Pfizer, Perrigo, Roche, Sanofi, Teva, Valeant, Shire, Dr. Reddy’s, OPKO, Horizon, Akorn, Pacira, Eagle, Lannett, Avadel, Teligent, Hikma, and their subsidiaries. Exhibit 3. August 2018 PriceRx Data for Subset of Companies – All WAC Increases Product Name Labeler DilTIAZem HCl AKORN Effective Date 8/1/2018 $ Change $7.11 % Change 186.61% Ful-Glo Ophthalmic AKORN 8/20/2018 $3.60 31.58% Ery External PERRIGO PHARMACEUTICALS 8/7/2018 $10.07 15.00% Methadone HCl HIKMA 8/7/2018 $4.24 13.79% Zomig Nasal/Oral IMPAX SPECIALTY PHARMA 8/1/2018 $39.81 9.90% Cotempla XR-ODT NEOS THERAPEUTICS BRANDS 8/7/2018 $22.38 7.00% Vyxeos Intravenous JAZZ PHARMACEUTICALS 8/8/2018 $232.50 3.00% Source: MediSpan PriceRx Exhibit 4. August 2018 PriceRx Data for Subset of Companies – All WAC Decreases Product Name Labeler Effective Date $ Change % Change Nystatin-Triamcinolone External TELIGENT 8/1/2018 ($43.90) (87.98%) Betamethasone Dipropionate PERRIGO PHARMACEUTICALS 8/2/2018 ($20.89) (84.40%) Lidocaine External TELIGENT 8/1/2018 ($125.00) (83.33%) Clobetasol Propionate TELIGENT 8/1/2018 ($138.31) (77.57%) Econazole Nitrate TELIGENT 8/1/2018 ($37.53) (75.02%) Desonide External PERRIGO PHARMACEUTICALS 8/2/2018 ($184.91) (71.97%) Atorvastatin Calcium DR.REDDY'S LABORATORIES, INC. 8/1/2018 ($38.62) (70.23%) Clobetasol Propionate TELIGENT 8/1/2018 ($104.00) (69.80%) Diclofenac Sodium TELIGENT 8/1/2018 ($62.50) (62.50%) Bloxiverz Intravenous AVADEL LEGACY PHARMACEUTICALS 8/3/2018 ($27.54) (60.00%) Desonide External PERRIGO PHARMACEUTICALS 8/2/2018 ($114.94) (59.77%) Erythromycin External PERRIGO PHARMACEUTICALS 8/7/2018 ($106.33) (59.63%) Testosterone Transdermal PERRIGO PHARMACEUTICALS 8/2/2018 ($263.65) (51.08%) Clobetasol Prop TELIGENT 8/1/2018 ($43.16) (46.58%) Ciclopirox External PERRIGO PHARMACEUTICALS 8/2/2018 ($41.83) (34.91%) HYDROmorphone HCl PERRIGO 8/2/2018 ($358.02) (31.74%) Clindamycin Phosphate TELIGENT 8/1/2018 ($4.30) (22.28%) Doxycycline Hyclate HIKMA 8/3/2018 ($150.00) (20.00%) Vazculep Intravenous AVADEL LEGACY PHARMACEUTICALS 8/3/2018 ($7.63) (15.00%) Methadone HCl HIKMA 8/7/2018 ($4.24) (12.12%) Emverm Oral IMPAX SPECIALTY PHARMA 8/1/2018 ($20.28) (5.00%) Source: MediSpan PriceRx 4 Wells Fargo Securities, LLC Equity Research Drug Pricing Report: August 2018 Required Disclosures Additional Information Available Upon Request I certify that: 1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed; and 2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this research report. 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