ASHINGTON — After months of pledging he would get pharmaceutical companies to lower their prices, President Trump can now say that he pressed the CEO of a major drug maker, Pfizer, to back down on a series of price hikes.
Pfizer, in turn, has earned glowing praise from Trump and his administration and will likely not suffer much, if at all, financially.
As for consumers: None of it might make any difference in the amount they pay for their prescription drugs, analysts say. Pfizer’s prices will likely go right back up at the end of the year.
Health care, it turns out, is complicated.
Here are some key takeaways from Pfizer’s decision to roll back its price hikes.
First and foremost, the terms the president struck with Pfizer aren’t as good for consumers as they might at first appear.
Pfizer isn’t dropping the drugs prices below their June levels — it’s just undoing increases that had only been in place for a few days. And importantly, it’s only doing so temporarily.
The company, led by CEO Ian Read, said it will raise the prices again when the administration’s drug pricing “blueprint goes into effect,” or at the end of this year, whichever comes first. It isn’t clear what would have to happen for the blueprint to take effect, in part because the blueprint is a broad outline of potential reforms with few concrete details.
“Pfizer’s alleged concession to Trump is a sham. Pfizer is only deferring price increases — not canceling them, and certainly not lowering its prices,” Peter Maybarduk, the director of the consumer group Public Citizen’s Access to Medicines Program, said in a statement.
Even patients who are using the specific drugs on Pfizer’s list may not notice much of a difference in their pocketbooks after the Tuesday deal, experts said. The drug pricing system is complicated, and while list prices do determine costs, a system of rebates and insurance benefit design will make it hard for any given patient to feel a direct impact from this change.
“I don’t think this is going to have any impact,” said Stacie Dusetzina, associate professor of health policy at Vanderbilt University School of Medicine. “I think that patients are really affected primarily [by the] relationship their insurance company has with these companies and with the PBMs.”
“This is much ado about nothing. Nobody in the American public is going to notice this in terms of the amount that they pay for their drugs,” said Gerard Anderson, a professor of health policy and management at the Johns Hopkins University Bloomberg School Public Health.
It might, however, be more than much ado about nothing for Pfizer. In addition to Trump’s praise on Twitter, Health and Human Services Secretary Alex Azar issued a public statement commending the company “for its constructive and professional approach, and its desire to work with President Trump to be part of the solution and not part of the problem.”
“It does build some goodwill with this administration, at a time that they are talking about trying to reduce drug prices,” said Mike Strazzella, a health lobbyist at Buchanan Ingersoll and Rooney. “When you’re talking about a public company, sometimes not having negative news is a win. And now Pfizer’s off the table for the president to talk about.”
It’s also unclear if anything happened in the conversation between Trump and Pfizer’s CEO — promises made or policies discussed — that has not yet been publicly disclosed.
Convincing Pfizer to roll back its price hikes isn’t trivial.
Pfizer’s move Tuesday was the first clear example of Trump successfully using the bully pulpit to shame a drug maker into doing something that is ostensibly against its own interests. And that’s despite more than a year and a half of steady criticisms of the industry from top health officials and Trump himself.
Azar even cautioned the industry last month not to raise prices July 1, a traditional time for mid-year increases — and yet Pfizer and others went ahead and did so anyway.
“This is not an industry that compromises,” said Rachel Sachs, an associate professor at Washington University School of Law. “This industry will always push for the maximum that it is able to get, and it is surprising to me to see Pfizer appear to back down on this question, because that’s not [this] industry’s style.”
The move even earned the administration rare praise from some of the drug pricing reform advocates who often want the administration to do more.
“We’re glad to see that President Trump took Pfizer to the woodshed. There are other companies that have increased prices and could use the pressure of a presidential tweet,” said David Mitchell, president of Patients For Affordable Drugs.
The deal doesn’t portend a major shift in the industry’s tactics.
Nearly all of the experts who spoke with STAT said the deal wasn’t likely a signal of a larger shift toward price drops. At the same time Pfizer raised its prices, for example, a number of other drug companies also upped theirs, including Teva Pharmaceuticals. None has yet announced Pfizer-style delays.
“Is the lesson for me, I shouldn’t bring my prices up? No,” said Ronny Gal, an analyst at Sanford Bernstein. “If you look at the same day, both Teva and Shire raised prices. … The lesson is, ‘Don’t get caught.’ And ‘Don’t get caught’ means spread your price raises, don’t raise a hundred products on the same day, spread them around. It means take smaller and more numerous price increases, figure out when Trump is busy on something else, with a porn star or Putin or something, and then raise prices.”
Sachs, the Washington University law professor, said the Pfizer announcement “is not a political game changer.”
“This isn’t the voluntary massive price decreases that the president promised in May,” she said.
And Mitchell, the drug pricing reform advocate, suggested that the administration would have to do much more if it wants to bring down drug prices.
“One-off tweets do not fix the systemic problems we have with drug prices. We need long-term structural action to provide enduring relief,” he said.
At the same time, Wall Street analysts suggested Pfizer’s move could put pressure on other companies to avoid big price hikes, particularly mid-year, according to a Bloomberg report.
The move shows the administration is focusing on list prices.
Azar has been clear about his focus on list prices, which are set by pharmaceutical manufacturers and play a major role in determining how much everyone — including patients — pay for drugs. But a change to the list price doesn’t always impact how much a patient pays at the pharmacy.
“They really appear to be focusing on either the list price or the price paid out of pocket at the pharmacy, and much less so on the … net price, the total spending we have on pharmaceuticals,” said Craig Garthwaite, an associate professor who directs the program on health care at the Kellogg School of Management.
That total spending is determined by the drug companies, which set prices, and the pharmacy benefit managers, which negotiate rebates, as well as insurance companies, which determine where those rebates go and set premiums.
By putting pressure on drug makers, Trump may force other companies, like PBMs, to react, according to Dusetzina, the Vanderbilt professor.
“I think if companies are really raising prices in reaction to PBM negotiations, if companies are now saying, well, we won’t raise prices because of the pressure from the administration to not increase the price, the list price, then there will have to be more intense negotiations between the manufacturers and the PBM,” she said. “I think if those aren’t successful, the manufacturers will continue to point to the PBMs as a source of the reason they need to increase the pricing.”
There are more questions than answers.
Right now, it’s not clear whether there’s more to the deal between Pfizer and Trump.
Already, Sen. Ron Wyden (D-Ore.) is raising questions about whether the administration brokered an actual deal with the drug manufacturer — an act that could violate laws that prevent the Health and Human Services Department from negotiating lower prices with drug companies.
In a pair of letters to Azar and Pfizer, he asked for details about what Read and Trump agreed to and whether other pharmaceutical companies could expect similar treatment, according to a press release.