President Donald Trump is trying to shame the largest U.S. drugmaker for hiking prices after he earlier said industry players were planning "massive" price reductions. He said Pfizer and others "should be ashamed that they have raised drug prices for no reason" while suggesting some unspecified retaliation.
Pfizer & others should be ashamed that they have raised drug prices for no reason. They are merely taking advantage of the poor & others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe & elsewhere. We will respond!— Donald J. Trump (@realDonaldTrump) July 9, 2018
A Pfizer spokesperson said the company markets more than 400 drugs and vaccines, and recently modified prices on about 10% of its portfolio, including some price reductions. List prices don't typically reflect what patients or insurers pay, he added. Reiterating a popular drug industry complaint, Pfizer's representative pointed out that net prices grew 0% in the first quarter "due to the growing amount of rebates paid back to stakeholders in the biopharmaceutical supply chain."
Pfizer's shares were trading slightly up in midafternoon trading after the tweet.
President Trump's tweet comes only days after reports that Pfizer raised prices on dozens of drugs starting in July, with many increases coming in at 9%. Before the reports, Trump said in late May that drugmakers were planning "massive" voluntary price cuts.
In a note before the president's tweet on Monday, Bernstein analyst Ronny Gal said Trump's price reduction statement caught HHS officials off guard. According to the analyst, HHS in response has asked companies to cut list prices without the expectation that net prices would come down.
Now, the president is taking his argument to the public.
Pfizer can take solace that it's not the only drugmaker—or large company—to attract the president's ire on Twitter. After Merck CEO Ken Frazier left the president's manufacturing council last summer in the wake of Trump's equivocal response to white supremacist violence, Trump tweeted that the helmsman would have more time to "lower ripoff drug prices." Trump has additionally weighed in on fighter jet prices, Amazon's tax situation and more.
Pfizer also isn't alone in raising its drug prices during the Trump administration. Pfizer's July price hikes were its second round this year after the industry's standard round of increases in January. In a January note, Wells Fargo analyst David Maris outlined price hikes from Pfizer, AstraZeneca, Novartis, Eli Lilly, Sanofi and more. AbbVie's 9.7% price hike on Humira will cost the U.S. health system $1.2 billion this year, the analyst predicted.
At the same time, many industry players have committed to limiting their hikes amid a yearslong examination of pharmaceutical pricing. Allergan and AbbVie are among companies that have pledged to keep price hikes to once per year and under 10%.
Sanofi has said it will keep its price hikes to the rate of medical inflation. Pfizer has not implemented such restrictions to pricing.
After a round of increases last year, members of the Interfaith Center on Corporate Responsibility wrote to Pfizer CEO Ian Read to say they're worried the company "has responded to the intense scrutiny on pricing over the past year by continuing a relentless march forward on drug price increases." In the letter, ICCR investor members said they believe Pfizer is “increasingly out of step with leaders in the sector.”
A company spokesperson declined to respond to the letter but reiterated a statement that the company "has always priced responsibly" and that it believes "innovative medicines are one of the most valuable and cost-effective segments of healthcare spend and are an important part of the solution to growing healthcare costs."
Even as President Trump has blasted industry pricing, his administration granted drugmakers a boost at the end of 2017 with tax reform. Surrounding the passage of tax reform, drugmakers have implemented tens of billions of share buybacks as drug prices have continued to climb.
In April, Sen. Cory Booker, D-N.J., argued companies could have used the savings to lower prices. Instead, the senator noted in a report, Pfizer, Merck, AbbVie, Amgen and Celgene kicked off share buybacks worth $45 billion before or after passage of the tax law. Companies have also announced new manufacturing and R&D investments, boosts to nonexecutive compensation, charitable gifts and more as a result of tax reform.