President Donald Trump issued a celebratory tweet in July proclaiming that pharmaceutical companies had vowed to roll back price increases for the American people, but the proclamation was either a gross misunderstanding or intentionally misleading.
Pharmaceutical giants Pfizer and Merck announced this week that the planned price hikes they delayed earlier this year will now go into effect.
According to business columnist Micheal Hiltzik of the Los Angeles Times, the manufacturers pulled a fast one when they told Trump they would defer planned price increases back in May, only to drop the bomb before the end of the year.
On July 10th, Trump tweeted: “Just talked with Pfizer CEO and @SecAzar on our drug pricing blueprint. Pfizer is rolling back price hikes, so American patients don’t pay more. We applaud Pfizer for this decision and hope other companies do the same. Great news for the American people!”
But industry observers point out that Trump lied when he bragged about prices “rolling back.”
As Hiltzik writes, “Instead, the company said it would ‘defer’ price increases on 41 drug formulations it had scheduled for July 1 until either Trump’s ‘blueprint to lower drug prices’ went into effect or the end of the year, whichever came sooner.”
The drug companies simply opted for the best of both worlds: humoring the president and receiving a bump in public opinion, while knowing all along their price increases would eventually take effect.
“Merck, in its July 20 announcement of price cuts, built itself a rather more elaborate loophole. The company said it would not increase the average net price of its entire portfolio of drugs by more than inflation annually,” Hikltzik wrote. “It dressed up the announcement by lowering the price of Zepatier, a hepatitis C treatment, by 60% and of six other drugs by 10%.”
He then noted that the seven drugs listed were small, unpopular and unprofitable formulations that account for very little of their sales, writing, “Zepatier sales had fallen so low by the first quarter of this year that Merck listed the drug’s U.S. sales in its quarterly financial report as essentially zero.”