Pfizer to Raise Prices on 41 Drugs in January

   “Drug Costs Are Too Damn High”

As long as consumers purchase drugs with other people’s money big pharma knows consumer (market) blow back from pricing increases will be minimal……..

The plans mean Pfizer would resume the practice of raising drug list prices after rolling back some increases under criticism from President Trump

By Jonathan D. Rockoff and Jared S. Hopkins

Updated Nov. 16, 2018

Pfizer Inc. PFE 0.69% plans to resume its practice of raising drug prices early next year after bowing to pressure from President Trump over the summer when the company rolled back some increases.

It said it would raise the list prices of 41 of its prescription drugs, or 10% of its portfolio, in January. The price increases were first reported by The Wall Street Journal earlier Friday.

Pfizer’s move comes amid mounting public scrutiny of drug pricing and growing pressure on pharmaceutical companies to lower prices.

It timed its announcement to its notification of insurers and state-run health plans in California that it was raising some prices, a person familiar with the matter said. Under a 2017 California law, Pfizer had to give 60-day notice if it wanted to increase the prices of certain drugs by more than 16% over two years.

Representatives for Bristol-Myers Squibb Co. BMY 1.50% and Allergan PLC said they also made notifications required under California’s new law but declined to name the drugs. Bristol-Myers said its list-price increases next year wouldn’t exceed 6%.

The White House directed questions to the Health and Human Services Department, which said the actions illustrate the “perverse incentives” in drug pricing that hurt consumers.

“President Trump and Secretary [Alex] Azar remain committed to lowering drug prices and reducing out-of-pocket costs, and will continue to take bold action to restructure this broken market,” a health-department spokeswoman said.

Like most of its rivals, Pfizer had regularly increased prices over the years. The moves helped it boost revenues even as sales were dropping for lucrative medicines that had lost patent protection and were facing competition from lower-priced generics.

Now, companies face a new calculus when they want to raise drug prices. Patients, whose rising deductibles have exposed them more to list-price increases, are speaking out. Lawmakers have responded by holding hearings, and passing transparency laws like California’s.

Drug companies have raised list prices on 263 drugs so far this year by an average of 7.8%, compared with averages surpassing 12% over the same period during the peak years of 2014 and 2015, according to Elliot Wilbur, a Raymond James & Associates analyst.

Drug pricing was an issue for Democrats and Republicans in the recent midterm elections. In October, Mr. Trump visited the Health and Human Services Department to offer plans for driving down the prices that Medicare pays for some drugs.

To get ahead of the public pressure, several big drugmakers including Allergan have pledged to take just one price increase each year and by less than 10%, or issued reports reporting average annual price changes.

Pfizer didn’t take those kinds of steps, and discovered the changed climate after it made increases on more than 40 of its medicines in July. Many of the increases lifted prices by 9.4%, and by double-digit percentages for the year overall.

Mr. Trump tweeted the company “should be ashamed,” prompting Pfizer shares to fall temporarily. The company then reversed the increases.

Yet Pfizer said at the time it was only deferring price increases, and Chief Executive Ian Read has told analysts and investors that the company would resume its pricing practices.

Of the 41 price increases Pfizer announced, 23 met the California law’s threshold, according to the person familiar with the matter. Most of the increases Pfizer plans in January will be 5%, though the company will raise three drugs’ list prices by 3% and one drug’s by 9%. The company said it was making the 9% increase because that drug has been approved for new uses thanks to ongoing study.

The moves don’t affect 90% of Pfizer’s portfolio, including newly approved medicines and sterile injectables, the person familiar with the matter said. The company didn’t name the drugs whose list prices it plans on raising.

Pfizer said it didn’t expect its revenues would grow any higher from the increases, because it will also up the discounts and rebates it pays to health plans buying the company’s drugs.

Mr. Read said he hoped patients would benefit from the rebates. “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,” he added.

Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com

 

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