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Pfizer CEO: This is what Trump doesn’t understand about the pharma industry

Ian Read, chairman and chief executive officer of Pfizer Inc., gestures as he speaks during a panel session at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 17, 2017.
Simon Dawson | Bloomberg | Getty Images
Ian Read, chairman and chief executive officer of Pfizer Inc., gestures as he speaks during a panel session at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 17, 2017.

Pfizer CEO Ian Read has a strategy to help Trump deliver on his promise to lower drug costs.

"One way of lowering health-care costs is to have more innovation and more competition," Read said Tuesday at the World Economic Forum in Davos, Switzerland. "So pay more for medicine so we can develop more good medicine, so we can drive, through competition, lower costs."

Over time, more innovation and competition in the marketplace "is the best way to lower drug prices," he added.

Read was responding to a question about Trump's vow to lower drug prices for consumers. In December, he put the industry on warning by telling Time magazine, " I don't like what's happened with drug prices." Trump later doubled down on those statements, telling the Washington Post that lower drug costs were going to be central to his plans for lowering health-care costs in the U.S. and overhaul the Affordable Care Act, or Obamacare.

But what Trump and others don't get, Read said, is that good drugs cost a lot of money to make.

"The pill is not the point," he said. It's just a "delivery mechanism for knowledge" to cure a disease or sickness. The pill is the end point of a long process of research and development, and those things cost money.

Read said Trump may also not realize that the the U.S. only spends 2% of its GDP on pharmaceuticals, compared to 1.5% or less for other OECD countries. But that extra half-point of spending adds up to a $1.6 trillion GDP contribution from the drug industry.

"The issue is not the cost of medicines," Read said. "In fact, a lot of countries spend more of a percentage of their health care [on pharmaceuticals] than the United States because they see medicine as a way of controlling costs."

Read remains optimistic about the incoming administration and noted Trump hasn't been briefed as much as he will about the pharmacy industry. "It's a matter of public policy and a matter of having a dialogue with the administration and I expect there will be an understanding from both parts," he said.