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Teva Pharmaceuticals is a leading generic drug manufacturer. Photo: Uriel Sinai/Getty Images

Monday was a rough day for pharmaceutical companies on Wall Street. The SPDR S&P Pharmaceuticals ETF fell more than 4%, and that was a relief.

Driving the news: Generic drugmakers were hit by a price-fixing lawsuit filed by 44 states alleging 20 corporate defendants conspired to fix prices of more than 100 generic drugs, raising prices by more than 1,000%.

  • Teva Pharmaceuticals shares fell more than 15%, with Mylan off 9%, and Endo International opening 10% lower after a downgrade by JPMorgan analysts, and then falling another 10% during the day. (Endo was already reeling from news it reported a wave of over 20,000 fatalities related to its drugs to the FDA.)

Why it matters: Health care stocks overall have had a terrible 2019 and it may just be beginning. A verdict or settlement in the lawsuit is likely years away, but the new spotlight the case puts on drug makers "spells trouble for investors," writes WSJ's Charley Grant, as the Trump administration looks to further dismantle the Affordable Care Act and take on high drug prices.

  • "The ACA is an ideal framework to make money: It maximizes access to health services without meaningful cost-control tools. The sector, which trails the S&P 500 this year, will suffer more if the risk of disruption increases."

The bottom line: Grant notes that lower drug prices are bad for every element of the health care sector. "Members of the supply chain, such as drug distributors, pharmacies and benefits managers, are generally paid for their services as a percentage of a drug's list price."

Go deeper: Wall Street is still freaking out over health care stocks

Go deeper

Updated 2 hours ago - World

North Korea claims latest missile test new weapon launched from submarine

North Korean state media claims the country's military fired this missile on Tuesday. Photo: Korean Central News Agency

North Korean state media announced that a detected ballistic missile launch off its east coast on Tuesday was a newly developed weapon test-fired from a submarine.

Why it matters: Pyongyang's latest in a series of recent missile launches into the sea happened hours after U.S. officials emphasized their commitment to restart negotiations on North Korea's nuclear weapons program, which have stalled since talks broke down during the Trump administration, AP notes.

4 hours ago - Politics & Policy

Manchin's massive means test

Illustration: Aïda Amer/Axios

Sen. Joe Manchin (D-W.Va.) is offering progressives a trade: He'll vote for their cherished social programs if they accept strict income caps for the recipients, people familiar with the matter tell Axios.

Why it matters: Manchin’s plan to use so-called means-testing for everything from paid family medical leave to elder and disabled care would drastically shrink the size and scope of the programs. It also would bring a key moderate vote to the progressive cause.

The China whisperer

Nick Burns. Photo: Chen Mengtong/China News Service via Getty Images

President Biden's nominee for ambassador to China will face aggressive questioning Wednesday about the most important, and potentially perilous, bilateral relationship in the world.

Why it matters: While Nick Burns is an experienced diplomat with support on both sides of the aisle, lawmakers want to use his confirmation hearing to force the administration into some tough positions on China.