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Merck & Co joins big pharma pricing pledge – but sceptics unconvinced

Large portfolios gives companies room for manoeuvre

Merck has joined Pfizer and Novartis in pledging to freeze price rises on its drugs, as the industry feels pressure from President Trump.

Merck

The US pharma company yesterday committed to not increasing the average net price across its portfolio of products by more than inflation annually.

The move follows recent announcements by Pfizer and Novartis that they would freeze price increases for the rest of the year, a mini-trend which began last week when Trump and Pfizer CEO Ian Read hand a lengthy telephone call about drug prices.

After the call, Pfizer declared it would reverse the price increases it has just announced. Trump had earlier exerted pressure on Pfizer and the industry with an angry tweet saying the industry was “merely taking advantage of the poor [and] others unable to defend themselves, while at the same time giving bargain basement prices to other countries in Europe [and] elsewhere," and promised action.

Following the declarations from Pfizer and Novartis, Trump has responded with thanks on Twitter.

tRUMP

However senators in Washington and advocacy groups are less than convinced that these new pledges are meaningful.

In response to Novartis postponing price increases for five months, Ben Wakana, executive director of Patients For Affordable Drugs, issued the following statement on Wednesday:

“Let’s keep reality in focus: Drug companies don’t get credit for keeping prices high. Novartis and Pfizer temporarily postponed regularly scheduled price gouging — they didn’t reduce prices or increase patient access. The bar for giving drug corporations credit for good behaviour cannot be this low.”

Democrat Senator Ron Wyden has said Pfizer's pledge was "long on theatrics and short on real and sustainable relief for patients” last while another Democrat Senator, Tammy Baldwin wrote to Ian Read demanding a pledge to permanently defer price increases.

Merck’s announcement that it wouldn’t raise average prices across its portfolio means that the company still has room to increase prices on its biggest sellers, which means its revenues remain protected.

Thus while it has pledged a 60% cut to the list price of its hepatitis drug Zepatier, sales of the product are so low that after paying rebates to insurers, the company recorded no US sales in Q1 this year.

The six other products which Merck is reducing in price are already off patent.

Pfizer has pledged to hold off on price increases until the White House has produced its promised blueprint for tackling rising drug costs.

The plan includes a wide range of proposals, including eliminating some rebates that are paid to pharmacy benefit managers, emphasising so-called value-based contracts, and switching some medicines from Part B to Part D programmes.

These changes, led by health secretary Alex Azar (a former Lilly executive) could bite into pharma profits, but the devil will be in the policy detail, which is yet to be announced.

Meanwhile, the FDA commissioner Scott Gottlieb has also this week launched another broadside against the industry, attacking its efforts to slow the arrival of biosimilars to market.

These elements are all coming together to produce a very different tone on pharma pricing, but just how far it will extend into policy and legislation is yet to be seen.

Article by
Andrew McConaghie

20th July 2018

From: Sales

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