Pfizer to raise drug prices despite Trump complaints

Pfizer is planning to raise prices on 41 drugs in January, a few months after the company agreed to defer hi...

Posted: Nov 17, 2018 4:32 PM
Updated: Nov 17, 2018 4:32 PM

Pfizer is planning to raise prices on 41 drugs in January, a few months after the company agreed to defer hikes under heavy pressure from President Donald Trump.

The manufacturer said Friday it would raise the list price of all but four of the drugs by 5%, effective January 15. Three drugs will increase 3%, while one will go up by 9%. The medications represent 10% of Pfizer's drug portfolio.

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The drugmaker surprised many in July with its decision to walk back hikes after Trump tweeted that the company should be "ashamed" of itself for raising prices and taking advantage of the poor. The next day, the president tweeted that he had spoken personally to Pfizer's CEO, who agreed to roll back the increases.

Trump has made lowering drug prices a main focus of his first term. In May, his administration rolled out a 44-page "blueprint" for increasing competition, reducing regulations and changing the incentives for all players in the drug industry. Last month, Trump outlined a plan to revamp how Medicare pays for certain high-cost drugs by basing reimbursements on the prices paid in other countries.

But Pfizer made clear all along that the deferral would be temporary -- lasting only until the end of the year or until Trump's blueprint went into effect, whichever came sooner.

Pfizer noted Friday that the increases will be offset by higher rebates and discounts offered to insurance companies and pharmacy benefit managers, which administer drug programs for employers, federal and state governments and other clients. It said it expects these players to share those benefits with patients so their costs don't go up.

"We believe the best means to address affordability of medicines is to reduce the growing out-of-pocket costs that consumers are facing due to high deductibles and co-insurance, and ensure that patients receive the benefit of rebates at the pharmacy counter," Ian Read, Pfizer's chief executive officer, said in a statement.

The White House did not respond to a request for comment.

The Department of Health & Human Services said that its secretary, Alex Azar, and Trump "will continue to take bold action to restructure this broken market."

"Actions announced today on list prices further illustrate the perverse incentives of America's drug pricing system," said Caitlin Oakley, an agency spokeswoman. "Drug companies raising their prices and offsetting them with higher rebates benefits everyone but the consumer, who routinely pays out of pocket based on list price."

Pfizer's price increases are "not egregious" and may serve as a trial balloon to gauge the administration's response, said David Maris, senior analyst at Wells Fargo Securities.

"However, given how public the previous rebuke was, we think this [will] enflame the debate around drug pricing," Maris said, "especially since it comes less than two weeks following an election that resulted in Democrat control of the House with many having run on drug-price-controls/Medicare-for-All platforms."

While a few other companies, such as Novartis and Merck, also agreed over the summer to freeze prices on certain drugs, many manufacturers continued to hike them. Drugmakers increased the cost of 104 medications in June and the first two days of July, only weeks after the administration unveiled its blueprint, according to a Wells Fargo Securities report. Manufacturers typically raise prices at the start and in the middle of the year.

Congress is expected to continue its focus on reducing drug prices next year, and it's one of the few areas of common ground between the parties. Both Trump and Democratic leader Nancy Pelosi, who is vying to reclaim her post as House speaker, mentioned it the day after the midterm elections last week.

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