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Drug Pricing Resurfaces, Pfizer to Raise Cost of 41 Drugs
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Drug pricing controversy is back in news with a Wall Street report stating that Pfizer, Inc. (PFE - Free Report) plans to increase the list prices of its 41 prescription drugs next year. The drug giant put off such increases earlier this year as it faced criticism from President Donald Trump.
The 41 drugs comprise about 10% of Pfizer’s drug portfolio. The company will raise the prices of most of its medicines by 5%, effective Jan 15 next year. However, prices of three drugs will rise by 3% while that of one will go up by 9%. Pfizer does not expect the price hikes to boost its revenues in 2019 as the move will be offset by higher rebates and discounts paid to insurance companies and pharmacy benefit managers (PBMs). Pfizer hopes that insurers and PBMs will pass on the benefits of discounts/rebates to consumers so that the latter’s out-of-pocket costs do not escalate.
Shares of Pfizer have rallied 20.1% so far this year compared with the industry’s 8.2% increase.
We remind investors that in early July, this New-York based company had announced an increase in list prices of several drugs, effective Jul 1. A week later, in a tweet, the president slammed Pfizer for the price hike. Trump said that Pfizer and other U.S. drugmakers should be “ashamed” that they raised drug prices for “no reason.” The tweet also suggested that by raising drug prices in the United States, these drug companies were offering “bargain basement prices” overseas. He warned that the administration will respond to such actions.
A day after the above tweet was published, Pfizer issued a statement indicating that it will defer the price increases until the president’s drug pricing blueprint goes into effect or the current year ends, whichever is earlier. The drug pricing blueprint hasn’t gone into effect yet.
Amid pressure on the industry from Trump’s administration over the rising drug costs, another leading player Merck (MRK - Free Report) pledged to limit its average price increases across its portfolio annually to the rate of inflation. Others like Amgen (AMGN - Free Report) and Novartis (NVS - Free Report) also showed commitment not to raise prices of its medicines through the rest of 2018.
Lowering prices of prescription drugs was one of Trump’s presidential campaign promises. He had committed to take on the industry bigwigs, which was also supported by his Democrat opponent Hillary Clinton.
Ever since, Trump has time and again criticized pharmaceutical companies for steep prices of medicines. This kept the pharma houses reeling under pressure for quite some time as they feared that Trump’s pharma plan could dent their profits.
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Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Drug Pricing Resurfaces, Pfizer to Raise Cost of 41 Drugs
Drug pricing controversy is back in news with a Wall Street report stating that Pfizer, Inc. (PFE - Free Report) plans to increase the list prices of its 41 prescription drugs next year. The drug giant put off such increases earlier this year as it faced criticism from President Donald Trump.
The 41 drugs comprise about 10% of Pfizer’s drug portfolio. The company will raise the prices of most of its medicines by 5%, effective Jan 15 next year. However, prices of three drugs will rise by 3% while that of one will go up by 9%. Pfizer does not expect the price hikes to boost its revenues in 2019 as the move will be offset by higher rebates and discounts paid to insurance companies and pharmacy benefit managers (PBMs). Pfizer hopes that insurers and PBMs will pass on the benefits of discounts/rebates to consumers so that the latter’s out-of-pocket costs do not escalate.
Shares of Pfizer have rallied 20.1% so far this year compared with the industry’s 8.2% increase.
We remind investors that in early July, this New-York based company had announced an increase in list prices of several drugs, effective Jul 1. A week later, in a tweet, the president slammed Pfizer for the price hike. Trump said that Pfizer and other U.S. drugmakers should be “ashamed” that they raised drug prices for “no reason.” The tweet also suggested that by raising drug prices in the United States, these drug companies were offering “bargain basement prices” overseas. He warned that the administration will respond to such actions.
A day after the above tweet was published, Pfizer issued a statement indicating that it will defer the price increases until the president’s drug pricing blueprint goes into effect or the current year ends, whichever is earlier. The drug pricing blueprint hasn’t gone into effect yet.
Amid pressure on the industry from Trump’s administration over the rising drug costs, another leading player Merck (MRK - Free Report) pledged to limit its average price increases across its portfolio annually to the rate of inflation. Others like Amgen (AMGN - Free Report) and Novartis (NVS - Free Report) also showed commitment not to raise prices of its medicines through the rest of 2018.
Lowering prices of prescription drugs was one of Trump’s presidential campaign promises. He had committed to take on the industry bigwigs, which was also supported by his Democrat opponent Hillary Clinton.
Ever since, Trump has time and again criticized pharmaceutical companies for steep prices of medicines. This kept the pharma houses reeling under pressure for quite some time as they feared that Trump’s pharma plan could dent their profits.
Pfizer currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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