On Tuesday, Pfizer Inc Chief Executive Ian Read said that he believes the Trump administration is looking to stop the practice of allowing insurers to receive rebates on prescription drug purchases. He further suggests that US drug pricing reform could focus more closely on the middlemen, and not the drug makers.
Of course, the administration has already publicly proposed a rule which would scale back the protections that are currently in place, protections which allow drug manufacturers to offer rebates to drug manufacturers and insurers and also pharmacy benefits managers (also known as PBMs). Indeed, Read said he thinks the Trump administration would prefer to get rid of these protections entirely, especially since these rebates are quite rare to patients.
As a matter of fact, Read said Pfizer had discussed the administration’s plans for these rebates “in broad terms” with the Health and Human Services Secretary Alex Azar. At the same time, the CEO did not relate any understanding as to how quickly these changes could be implemented.
U.S. President Donald Trump said that lowering prescription drug costs for US patients consumers a top priority. The administration actually points the finger at health industry middlemen—like PBMs who administer drug benefits for employers and health plans—and health insurers for driving prices up. Read goes on to say that Pfizer currently receives nearly 60 percent of its list prices on drugs, which, he says, suggest roughly 40 percent, then, gets distributed to these “middlemen”. He concludes that an end to this rebate system will allow for drug makers to keep their price hikes more in line with standard health care inflation.
Following this, then, the largest US drugmaker has chosen to retreat from its planned price hikes on approximately 40 of its current drugs only a few weeks ago. Bowing to intensifying political pressure, several major drug makers have also announced drug price freezes until the end of the year.
And with that, it looks like Pfizer shares jumped nearly 3 percent by $1.09 to $39.68 in afternoon trading, which is actually close to the 16-year high.