Biotech and Pharma

Pfizer CEO on what happened after Trump tweeted

Key Points
  • President Donald Trump publicly condemned Pfizer for raising the price of about 40 drugs.
  • After Trump's tweet, Pfizer CEO Ian Read said he knew the best move would be to defer its early July price increases.
  • Read expects the Trump administration will eliminate rebates for prescription drugs.
Pfizer CEO: Made decision to defer drug prices after Trump tweet
Pfizer CEO: Made decision to defer drug prices after Trump tweet

Before he even spoke to the president, Pfizer CEO Ian Read said he knew the best move was to defer the drug giant's early July price increases; a Trump tweet was all it took.

"After he tweeted, we looked at the various situations, and we decided before I spoke to him we needed to defer the price increases," Read said Tuesday in a telephone interview with CNBC. Why? "Because we wanted to have a positive relationship with the Hill and administration as we go through this blueprint."

President Donald Trump's blueprint to lower drug prices, introduced in May, contained a number of approaches, including changing the drug rebate system, increasing negotiation on prices for certain medicines, and seeking to address disparities in what the U.S. pays compared with other countries.

"I believe that the blueprint will be a positive for patients," Read told CNBC. It also "will be positive for Pfizer; it will allow us to get faster access (for patients) to drugs."

Trump tweeted on July 9 that "Pfizer and others should be ashamed that they have raised drug prices for no reason," referring to a series of hikes Pfizer took July 1, and pledged to respond. Two days later, he tweeted again, saying he'd just spoken with Read and Health and Human Services Secretary Alex Azar and that Pfizer "is rolling back price hikes."

Pfizer then confirmed it would defer the planned increases, on 41 medicines, until the end of the year, or until the blueprint goes into effect.

Many, including Sen. Ron Wyden, in a letter to Pfizer, questioned what must be implemented to count as the blueprint taking effect.

Read said Tuesday there are a number of important tenets to the plan but it's focused mainly on drug rebates — discounts paid from manufacturers to benefits managers and insurers, often to secure access on drug formularies.

"Frankly, the principal one for us would be a significant decision on rebates," Read told CNBC. "Effectively, patients who buy pharmaceuticals are subsidizing the rest of the health industry, at about 40 percent of the list price of pharmaceuticals ... Patients should not be subsidizing, to a tune of 40 percent, the rest of the health-care system."

On a call with analysts, Read said he believes the Trump administration may eliminate rebates altogether; that could have a significant effect on pharmacy benefit managers, including Express Scripts, CVS Caremark and UnitedHealth's Optum, as well as drug distributors — McKesson, AmerisourceBergen and Cardinal Health — that are paid based on a drug's list price.

— CNBC's Angelica LaVito contributed to this report.