In response to President Donald Trump’s tweet on Monday, Pfizer, Inc. (PFE - Free Report) said that it will defer its recent price increases of several prescription drugs maximum until the end of the year. Chief executive officer (CEO), Ian Read, announced the decision following an “extensive discussion” with the President.
Last week, the New York based company had announced an increase in list prices of several drugs, effective Jul 1. This was the second time this year that Pfizer increased prices of its medicines. Pfizer raised prices of its medicines by an average of 9%, which is within the agreed limit of 10% price rise a year. However, prices of a few drugs like Xalatan, Viagra and Chanix have already increased in double digits including the January hike.
Pfizer defended the price rise by stating that the list price does not reflect the actual price, which includes a discount. It also mentioned that it had hiked prices of only one-tenth of its drug portfolio and reduced prices of five drugs by 16% to 44%.
In his first tweet on Monday, the President criticized Pfizer for the price increases. Trump warned that the administration will act in response and Pfizer and other U.S. drugmakers should be “ashamed” that they have raised drug prices for “no reason”. The tweet also said that by raising drug prices in the United States, these drug companies are offering “bargain basement prices” overseas.
In the latest statement, Read said the prices of these medicines will return to their pre-Jul 1 levels as soon as technically possible. He also said the prices will be deferred until the President’s drug pricing blueprint goes into effect or until the end of the year, whichever is sooner. Meanwhile, the price cuts by the company will remain in effect. In a tweet on Tuesday, the President appreciated Pfizer’s decision and hoped others would follow suit.
Incidentally, Pfizer’s announcement of the price hike came only a few weeks after Trump’s claim in May that pharma companies would soon take massive price cuts voluntarily. However, there have been no signs of such price cuts.
Pfizer faced criticism for the price hikes as there is a concern that price hike by one company may soon trigger a market-wide increase in prices by drugmakers like J&J (JNJ - Free Report) , Merck (MRK - Free Report) , Lilly (LLY - Free Report) and others.
This year so far, Pfizer's shares have increased 3.3% against a decrease of 2.2% for the industry.
Pfizer currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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