Pfizer CEO Albert Bourla speaks shakes with US President Donald Trump at a White House event on Tuesday.
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P.Trump resident and pfizer announced an agreement to reduce drug pricing yesterday. And it seems that the pharmaceutical giant got its best end. Signed at a press conference on Tuesday on Tuesday, the deal gives the CEO Albert Bourla and his company a postponement of endangered invoices and something from a truce from a management he had learned. It was a victory so clear that the company’s shares increased about 16% since its announcement.
The price of this stability, from the perspective of Pfizer, is not too much – a fraction of its revenue and one that is not expected to have a large influence on the lower line. “It is worth noting that Pfizer’s Press Release did not change a single financial measurement or part of the guidance,” writes Carter Gould, analyst Cantor Fitzgerald, in a Tuesday report.
With the agreement, the complete details of which have not been revealed, Pfizer has agreed to significantly reduce prices in many of the primary care medications for conditions such as dermatitis, menopausal symptoms and arthritis for patients with Medicaid. He also agreed to comply with the president’s preferred pricing for new products, which means they will not be sold at higher prices in the US than in other rich countries. Basically, the agreement does not set the ceilings in prices.
A Tentpole of the Agreement is Pfizer’s agreement to record many of these medicines on a scheduled “Trumprx” website, which the administration’s claims will allow Americans to pay for drugs at discount prices. In return, he agreed to relieve the pfizer from the invoices, which Trump said last week would be 100%for the next three years. This could have placed a heavy burden on the company, which operates almost 30 production facilities outside the United States. as part of the Pfizer Agreement as well announced “The $ 70 billion dedicated to US research, development and capital projects in the coming years,” but it is not clear how new and already arranged.
“Trump can say that it has reduced drug prices for millions and millions of Americans without validating it.”
In general, Pfizer faces a very little risk of disadvantage in this deal, while gaining a guarantee of regulatory stability. This is a big deal at a time when Trump has repeatedly threatened drug tariffs and pressured pharmacy companies to reduce prices for Americans.
Wall Street saw the deal on what is clearly: “This represents a victory for Pfizer,” Jeffries analysts wrote today. Rajiv Levenhal, an Emarketer analyst, agreed. “This was a smart and I understand a game,” he said Tower. Part of the reasoning here: Less than 5% of Pfizer’s annual revenue comes from Medicaid and only 2% comes from consumers who pay for drugs. The overwhelming majority of Pfizer’s revenue comes from patients who have private insurance or Medicare coverage, who are not affected by yesterday’s agreement. And most people do not pay the list prices anyway because of the complexity of how drugs are available with discounts and discounts. In addition, the medicines offered in Medicaid are usually already abruptly reduced.
Levenhal called the deal more for the optic than the results. “I don’t think it’s something that will have a huge impact, but it will do for the press releases and the titles and the announcements,” he said. “Trump can say that it has reduced drug prices for millions and millions of Americans without validating it.”
Other drug companies are almost certainly considering Pfizer’s agreement to guide their own: offering strategic price cuts in exchange for regulatory assurance. “I think other companies will see this as a repetitive business model,” Leverethal said. If it plays like Pfizer’s agreement, there may be more fancy announcements, but little impact on Big Pharma businesses. “Everyone comes next week,” Trump told the press event. “We make agreements with all this.”
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