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One of the reasons biotech stocks can be your portfolio's biggest winners is because of the massive profits companies see after releasing a blockbuster drug – especially with the exorbitantly high prices of this year's new treatments…
Earlier this year, Gilead Sciences Inc. (NYSE: GILD) drew attention to sky-high drug prices when it launched its $84,000 hepatitis C treatment. But Gilead's roughly $1,000-per-pill drug looks like a bargain compared to two new just-approved treatments.
Merck & Co. Inc. (NYSE: MRK) got the go-ahead from U.S. regulators on Sept. 4 for a new kind of cancer drug aimed at releasing the body's immune system to combat tumors. The drug carries a hefty price of $12,500 monthly for the average patient, or $150,000 for a year's worth of treatment.
In addition, the first of a promising class of new cancer drugs from Bristol-Meyers Squibb Co. (NYSE: BMY) and Tokyo-based Ono Pharmaceuticals Co. hit the market in Japan in early September at an average annual cost per patient of $143,000.
These staggering figures are only going to get bigger in coming years. There are no price controls on new medicines in the United States, unlike in Europe and other countries.
And according to Money Morning Bioscience Investment Specialist Ernie Tremblay, investors can expect growth in U.S. Food and Drug Administration (FDA) drug approvals plus strong growth in prescription drug sales.
Here are a closer look at the priciest drugs – and the biotech stocks behind them…
Three Biotech Stocks Getting a Boost from Pricey Drugs
Gilead's hepatitis C treatment Sovaldi ignited this year's debate about over-the-top costs for game-changing drugs.
Sovaldi is the first in a new class of all-oral therapies for the contagious liver disease hepatitis C, which affects roughly 3.2 million people in the United States – although the number is likely much higher.
Most people don't know they are infected with the disease, which ranges in severity from a mild illness lasting a few weeks to a serious lifelong illness. Approximately 75% to 80% of people who become infected develop a chronic infection.
Sovaldi has demonstrated an ability to cure more than 90% of patients in as little as 12 weeks with few side effects. Prior to Sovaldi's approval, hepatitis C treatments took 24 to 48 weeks, cured maybe 75% of patients, and involved a number of pills, as well as injectable interferon that caused side effects, prompting many people to avoid or discontinue treatment.
Despite Sovaldi's impressive patient track record, insurers and others have balked at its $1,000-per-pill and $84,000 total treatment cost.
But Gilead defends the hefty cost.