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Drug Development

Trump’s tweets prompt Pfizer to postpone drug price hikes

The president deemed the price rollback a victory, but industry watchers say Pfizer could benefit in the long run

by Lisa Jarvis
July 13, 2018 | A version of this story appeared in Volume 96, Issue 29


Pfizer last week succumbed to pressure from President Donald J. Trump and temporarily reversed price increases on a host of drugs. While the action was an unusual direct response to Trump’s ongoing criticism of the pharmaceutical industry, many industry watchers see it as having little effect on what consumers pay for drugs.

After Pfizer increased the list prices on 40 drugs on July 1 while lowering the price on five others, the president took to Twitter to say the company was “taking advantage of the poor & others unable to defend themselves.”

The next day, Pfizer said that after a conversation between CEO Ian Read and the president, the increases would be postponed. The reversal, the firm said, was meant “to give the president an opportunity to work on his blueprint to strengthen the healthcare system and provide more access for patients,” referring to a drug pricing white paper released in May.

Trump declared Pfizer’s decision a victory, but industry watchers say the delay will do little to affect prices paid by consumers. And while a handful of companies then ditched their own price hikes, a number of others, including Celgene and Roche, were undeterred.

Some view Pfizer’s choice as a careful calculation that the blueprint will shift the focus away from drug companies. In a report, John J. Leppard, a health care analyst at Washington Analysis, points out that “the phrasing of Pfizer’s press release … suggests that the company may view the administration’s plans—which largely target the supply chain rather than manufacturers—as more beneficial longer-term than a July 1 price hike.”

In a separate move, Pfizer is yet again overhauling its structure. The reorganization comes as the drug giant prepares for generic competition for the nerve pain medication Lyrica. Pfizer’s best- selling pill, Lyrica last year commanded $3.5 billion in sales in the U.S., where the patent is set to expire in December.

Starting in 2019, Pfizer will have three segments: Innovative Medicines, a research-based unit; Established Medicines, its off-patent medicines unit; and Consumer Healthcare.

The reshuffling could be a prelude to a spin-off of Consumer Healthcare, which sells over-the-counter brands. Pfizer has been considering options for the unit since October 2017 and will decide its fate this year.


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