pharmaceutical players to follow, allowing for headline pricing concessions and a Trump ‘win’ without more punitive implementation” of the president’s so-called most-favored-nation policy or tariffs, Seigerman added.
Trump in May signed an executive order reviving that controversial plan, which aims to tie the prices of some medicines in the U.S. to the significantly lower ones abroad. As part of that effort, Trump in July sent letters to 17 drugmakers — including Pfizer — calling on them to take steps to lower drug prices by Sept. 29.
“As we think about the group more broadly, we would not be surprised to see a number of similar agreements to help remove uncertainty on the [most-favored-nation policy and] tariffs,” JPMorgan analyst Chris Schott said in a note Tuesday.
‘Most-favored-nation’ risk may be manageable
Tuesday’s deal appeared to bring other good news to some drugmakers.
Pfizer agreed to sell its existing drugs to Medicaid patients at the lowest price offered in other developed nations, or what Trump calls the most-favored-nation price. But Schott said most-favored-nation pricing for Medicaid is “highly manageable” for Pfizer. He said that’s in part because Medicaid pricing is already similar to international levels for most drugs.
Notably, Medicaid represents less than 5% of the company’s U.S. sales and an “even smaller percentage of global sales,” Leerink Partners analyst David Risinger said in a note Tuesday.
The same goes for many of the large drugmakers, according to data compiled by Schott. Medicaid makes up less than 5% of Bristol Myers Squibb’s U.S. sales, less than 7% of Regeneron’s domestic revenue, and around 8% of Lilly’s and AbbVie’s domestic sales.
Medicaid also represents around or less than 10% of U.S. sales for all of J&J, Merck, Amgen and Biogen.
Gilead is among the drugmakers with greater exposure to Medicaid, with the program making up around 20% of its domestic sales. Medicaid plays a large role in HIV prevention and treatment, especially for underserved populations, which is a core focus for Gilead.
The other part of Pfizer’s deal involves the company guaranteeing the same most-favored-nation pricing on its new drugs for Medicare, Medicaid and commercial payers. But Schott said he sees a “limited impact” of that provision, as he expects Pfizer and the broader industry to raise their prices for new drugs abroad rather than lower them in the U.S.
He added that it will likely apply to a small number of treatments each year and is “much more digestible” for the company than any broad implementation for products already on the market.
The Author
Discover more from News Network Plus
Subscribe to get the latest posts sent to your email.
