Copyright © HT Digital Streams Limit all rights reserved. Pfizer avoids US rates with a drug price agreement, making other pharmaceutical CEOs angry. The agreement ensures lower Medicaid prices and a direct-to-consumer platform, powered by a Trump-Bourla ratio. (Bloomberg) Summary of the wire team negotiations held a long dance between President Trump and CEO Albert Bourla. Over a weekend at the end of September, the team from Pfizer officials working with the Trump administration on drug prices got a message: Clean your schedules. Negotiations have reached a point. The CEO, Albert Bourla and Chris Kld, head of Medicare, who led negotiations for the administration, met in Washington and reached a handshake agreement on the contours of a drug price. A deadline to avoid rates was on track, and there were still a few things to iron out. All the major pharmaceutical businesses have been told that they should get a plan to lower and manufacture prices in the US, or to have consequences, including rates. Pfizer wanted to make sure that if the company agreed, it would get a postponement of levies and that the manufacturing investments could focus on younger and future products, rather than infrastructure for drugs that would be generic, according to people who are familiar with the matter. Conversations sharpened in the week of September 20. The final agreement gathered in the small morning hours before a deadline set President Trump to set up rates. It was signed by Bourla and health secretary Robert F. Kennedy Jr. Just before the announcement Tuesday, according to people familiar with the agreement. What was revealed in the Oval Office that day, while Bourla stands near Trump, Kennedy and others while smiling, was a victory for both parties. Trump had to announce an agreement that reduces drug prices and starts on a new platform for direct consumer named TrumPrx. And Pfizer avoided rates with a strategy that would be a minimal hit to its bottom line. Trump’s Operation Warp velocity helped speed up the development of the Covid-19 vaccine. The agreement was not only built on the team negotiations, but about the long-standing relationship between Bourla and Trump, which was cultivated about meals at Mar-a-Lago and regularly over the phone between the president and CEO. Bourla recently suggested that Trump’s Operation Warp velocity, which was launched to quickly develop Covid-19 vaccines, was the kind of achievement that “would usually be worthy of the Nobel Peace Prize.” During Tuesday’s announcement, Bourla Trump resigns for his friendship and embraces Centers for Medicare and Medicaid Services Administrator Mehmet Oz. It was a moment of victory for Bourla that made some of other drivers. During a 90 -minute call on Wednesday with executive members of Phrma, the trade group representing the pharmaceutical industry, some other CEOs were angry and felt blinded, according to people familiar with the meeting. Genentech CEO Ashley Magarge has discussed whether Bourla should be removed as chairman, one person said. A Genentech spokesman declined to comment. Bourla pushed back and told the managers that Trump made clear that he wanted better prices for the American public and that the agreement showed how companies could prevent tariff threats and have certainty to invest in their businesses. “We have a constant dialogue with the US government and worked with the administration on a number of issues where we share the president’s commitment to address devastating illness and make medicines more affordable,” a Pfizer spokeswoman said. White House officials said the goal was to preserve innovation, while also getting lower drug prices for Americans. Pfizer and Bristol-Myers Squibb, co-marketers of the Blood Dunner Eliquis, said in July that they would sell the drug at a discount through a direct online purchase service. The agreement lifted besieged drug shares by showing a way to companies to remove the threat of rates and deal with the US price pressure. Pfizer shares have risen by 14% since the agreement was announced. Shares of other major drugmakers, including Eli Lilly and Astrazeneca, have also risen sharply, for the expectation that other companies could achieve similar transactions that save them more peculiar outcomes. Trump’s goal of reforming how drugs are priced in the US began in his first presidential term, but it was only in his second term that he gained momentum. His proposals for pharmaceutical rates and an executive order of May asking the price of “most favorable nation” – where the US government pays the same as the lowest prices for drugs paying other rich countries – pharmaceutical companies eventually brought to the negotiating table like never before. Several drug makers, including Eli Lilly and Johnson & Johnson, announced plans in the coming years to spend dozens of billions of dollars on US manufacturing and research as a performance of collaboration. Pfizer has used a different approach to secure an agreement before being committed to spending billions of dollars more on US drugs, the price of most favored, with the argument that it would deprive them of financing needed to develop future medicines and that it could at risk in the billions of rands in the recently announced investments. At the time, some industry leaders did not have much stock in an executive order signed by Trump because it seemed as if the government did not have the authority to impose the conditions. And details of the administration were sparse. The most favored proposal kicked off a series of meetings between administrative officials and drugmakers, including Pfizer, to take out the details. Health Secretary Kennedy and CMS administrator OZ delegated the negotiations to a small team led by many. The initial meetings were cordial, but they had not yet dug in material issues, and Pfizer did not incur any obligations, Bourla said at an investment conference in June. In that month, Pfizer held several meetings with CMS officials, according to people who are familiar with the case. Taking away the company: The Trump administration wanted to negotiate individually with companies, rather than with a powerful trading group like Phrma. This meant that Pfizer and other businesses could not discuss their discussions with each other to avoid antitrust offenses. Some companies have taken small steps to fulfill some of the goals set out by Trump. In July, Pfizer and Bristol-Myers Squibb, who marketed the widely used blood thinner Eliquis, announced that they would sell the drug at a discounted price through a direct online purchase service. Bourla told managers that the agreement showed how businesses could prevent tariff threats and have certainty to invest in their businesses. But Pfizer and other drugs did not have a broader price reduction. By the summer, there was little progress in the negotiations. “We stopped,” Oz said at a White House press conference on Tuesday. Trump has gained the pressure. At the end of July, he sent letters to the CEOs of 17 drugs, including Pfizer, in which he claimed action within two months. He set out four main goals, including the expansion of most favored prices, to Medicaid and the latest medicine. He demanded that drug makers have increased revenue from abroad if higher prices can be negotiated in other countries, and that businesses at lower prices participate in direct-to-patient sales of high volume medicines. The letters were striking because they did not suggest that MFN prices were generally applied to include commercial insurance or Medicare. It was more limited in scope than seemed on the table in May. In the letter to Pfizer, Trump threw “Dr. Bourla” into the greeting and wrote “Albert” with a marker, a sign of their fame. He did the same for his letter to Eli Lilly CEO David Ricks. The letter ‘Ask many of us’, Bourla told analysts in early August. He said he had active discussions with Trump, Kennedy and Oz about the letter. “You know that the president is impatient, so he wants the results quickly,” Bourla said. The week before Trump’s deadline on September 29, he implemented 100% rates on pharmaceutical products on October 1, but that businesses that actively build new US manufacturing capacity would be released. The threat of rates motivated behavior and “clearly motivated”, Bourla said at the White House press conference that the agreement announced. On the morning of the day the agreement was announced, Bourla Steve UBL, the head of Phrma, called to notify him, according to people who are familiar with the case. Pfizer agreed to offer prices most favored to its medicine to the Federal and State Medicaid program for people with lower income. The prices will be linked to prices charged in several other wealthy countries. Pfizer also said it will launch future medicines at prices equal to those in other rich countries. And it would provide some discounts to the new TrumPRX direct-to-consumer site launched in 2026. “I was the honor that Albert would be the first,” Trump said at the press conference. “He did a fantastic job at the Covid. Pfizer is top -to. ‘ Trump said more transactions with other drugs will follow. In return, Pfizer received a commitment that its medicine manufactured abroad would not have rates for three years. The agreement may not make the industry entirely clear. But for the time being, the price cuts do not apply to patients with Medicare and commercial insurance, which make up most of Pfizer’s US business. Medicaid is less than 5% of Pfizer’s US revenue, said David Risinger, analyst of learning partners. And the prices most favored, which will be applied to Medicaid, may not be much lower than discounts, Pfizer and other drugs are already offering Medicaid. The discount offered by Pfizer in the direct purchase platform is unlikely to hamper its sales, analysts said. This is likely to be in line with discounts that Pfizer already supplies to health insurers and employers. And most insured patients will have lower costs out of pocket by getting the medicine through their insurance rather than the direct purchase service. Sean Sullivan, a professor at the University of Washington School of Pharmacy investigating drug prices, said: “It would be for a very small fraction of the market,” Sean Sullivan said. Write to Liz Essley Whyte at liz.whyte@wsj.com, Jonathan D. Rockoff at jonathan.rockoff@wsj.com and Peter Loftus at Peter.loftus@wsj.com Catch all the business news, market news, break news events and latest news on Live Mint. Download the Mint News app to get daily market updates. More topics #pfizer read next story
Within Pfizer’s drug prices deal with the Trump administration
