Will Drug Price Hikes Impact Drug Spending?

Despite a scolding from President Trump over drug price hikes, drug giant Pfizer announced it will raise the prices of 41 medications in January. That’s 10% of its entire drug portfolio.

According to a Pfizer statement, the increase in list price to this subset of the company’s portfolio will be 5%. The only exceptions are three products that have a 3% increase and one product that is increasing 9% due to the completion of two extensive development programs that led to the recent FDA approvals of two new medical uses that meet unmet patient needs.

“These list price increases are expected to be offset by higher rebates and discounts paid to Insurance Companies and Pharmacy Benetit Managers and the net effect on revenue growth in the U.S. in 2019 is expected to be zero,” according to the Pfizer statement. “Given the higher rebates and discounts, we expect that the healthcare system will share those benefits with patients, so they do not experience higher costs for their medicines. In 2018 the net impact of price increases on revenue growth is projected to be a negative 1% in the U.S. compared with 2017.”

Back in July, Trump tweeted: “Pfizer & others should be ashamed that they have raised drug prices for no reason.” Later, Trump tweeted that Pfizer agreed to roll back price hikes after he meet with the drug maker’s CEO: “Pfizer is rolling back price hikes, so American patients don’t pay more. We applaud Pfizer for this decision and hope other companies do the same.”

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