Pfizer CEO says no need to alter its drug pricing practices

Print 01 February 2017
Bill Berkrot / Reuters

Pfizer Inc (PFE.N) Chief Executive Ian Read said on Tuesday the company would not change its philosophy on pricing of its medicines or when it takes price increases, bucking a recent trend by some rivals of the largest U.S. drugmaker.

The comments, made on a conference call after Pfizer reported slightly lower than expected fourth-quarter profit, came as several of Read's industry peers met with U.S. President Donald Trump, who has insisted prescription drug prices must come down.

Discussions with Trump included some ideas on how that goal might be accomplished, including tax reform and undoing regulations that slow entry of new drugs and generics to the market.

Three large drugmakers, including U.S.-based AbbVie Inc (ABBV.N) and Allergan (AGN.N), have already vowed to keep 2017 price increases under 10 percent. AbbVie and Allergan also pledged to take one round of increases, rather than the common industry standard of twice-yearly price hikes.

"I believe we have always priced responsibly, so I don't need to make that commitment," Read said in a telephone interview.

"We feel we appropriately price our products to the value in the marketplace, and that's essential for free market systems where you need to recover and direct resources to further innovation," he said.

Drugmakers have faced intense criticism from politicians, insurance companies and patient advocacy groups over the high U.S. cost of new medicines and exorbitant price increases for some older generic drugs.

Read said the pharmaceutical industry has been unfairly singled out for high U.S. healthcare costs, pointing to charges by hospitals and outpatient services as primary culprits. U.S. drug prices on average rose only 2.8 percent in 2015, he said, after discounts and rebates to payers.

The Pfizer CEO applauded Trump's call to speed up drug approvals.

"To the extent that they can remove regulations and make it easier and faster to bring drugs to market, that will make the market more competitive and bring down drug prices," Read said.

As to Trump's clarion call to bring manufacturing and jobs back to the United States from the multinational industry, Read said that will require tax reform.

An accountant by trade, Read has been an outspoken critic of high U.S. corporate taxes that he feels put Pfizer at a competitive disadvantage to overseas rivals. He twice tried and failed to acquire large European-based companies that would have allowed New York-based Pfizer to relocate and take advantage of lower taxes.

"I'm very encouraged by the president's affirmation that tax reform is one of his major priorities," Read said. "Taxes have consequences."

Earlier on Tuesday, Pfizer forecast 2017 adjusted profit of $2.50-$2.60 per share on revenue of $52 billion-$54 billion, in line with Wall Street estimates, according to Thomson Reuters I/B/E/S.

It reported adjusted fourth-quarter profit of 47 cents per share, missing the average analysts' estimate by 3 cents, as sales of its Prevnar pneumonia vaccine fell 23 percent to $1.42 billion.

Pfizer said it expects 2017 Prevnar sales to be flat to slightly down.

Pfizer shares were up 0.7 percent at $31.53 on Tuesday afternoon.

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