Pfizer backs down on drug price increases, announces split into three businesses
Following attacks by President Trump on Twitter, drugmaker Pfizer backed down on its previously announced plan to raise drug prices on a number of prescriptions. Pfizer also announced Wednesday it will reorganize into three businesses, effective in 2019.
The new structure will split the company into a science-based innovative medicines business; an off-patent branded and generic established medicines business; and a consumer healthcare business.
“This new structure represents a natural evolution of these businesses given the ongoing strength of our in-market products and our late-stage pipeline and the expected significant reduction in the impact of patent protection losses post-2020 following the loss of exclusivity for Lyrica in the U.S., which is expected to occur in or after December 2018,” Pfizer CEO and Chairman Ian Read said in a statement.
Taking aim at the growth fundamentals among the aging population, the innovative medicines business will include all current Pfizer innovative health business units and a new hospital business unit for anti-infectives and sterile injectables, as well as the company’s biosimilars portfolio. This business is expected to comprise approximately 75% of Pfizer’s revenues and will be led by Group Presidents John Young and Angela Hwang.
The established medicines business will include the majority of Pfizer’s off-patent solid oral dose legacy brands, including Lyrica, Lipitor, Norvasc and Viagra, and certain generic medicines and operate with autonomy with distinct business functions.
The consumer healthcare business will include all over-the-counter medicines and continue to operate autonomously.
Drug price reversal
On Tuesday, Pfizer reversed its decision to increase prices for 100 drugs by an average of 9 percent, which was effective July 1.
“The company will return these prices to their pre-July 1 levels as soon as technically possible,” a Pfizer announcement reads.
President Trump called out Pfizer via Twitter on July 9, accusing the company of “taking advantage of the poor.”
Trump applauded Pfizer’s move Wednesday, noting he, along with HHS Secretary Alex Azar, spoke with Read about working with the administration on its blueprint to lower prescription drug prices across the industry.
“Pfizer shares the president’s concern for patients and commitment to providing affordable access to the medicines they need,” Read said in a statement.
Azar, who also weighed in on Pfizer’s initial plan, called the rollback a “major win for American patients” in a statement.
HHS published an outline of its plan to lower drug prices in a blueprint, American Patients First, in May 2018.
Some states have taken the issue into their own hands. In California, a new law, considered to be one of the most aggressive efforts by states to make drug pricing transparent, is pushing drugmakers to cut back on planned price hikes, Bloomberg reported.
Under the law, which went into effect earlier this year, drugmakers are required to give advance notice of price increases to insurers, governments and purchasers. At least three major drug companies rescinded or reduced planned price hikes on at least 10 drugs in California within the last few weeks, according to Bloomberg.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."