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 Amid heightened political scrutiny over the high cost of
prescription medicines and promises by Trump that drug price
reductions were coming, New Jersey-based Merck became the first
major drugmaker to announce voluntary price decreases.
In addition to slashing the price of Zepatier, which owns a very
small share of the hepatitis market, Merck said it would lower the
list price by 10 percent of six other older drugs with minuscule
sales. It also said it would not increase the average net price of
other medicines in its portfolio of products by more than the
inflation rate annually.
While that sounds like a substantial commitment, Evercore ISI
analyst Umer Raffat noted that it does not amount to a significant
change and "technically leaves the room open for increases where it
would like to."
"If we look back at Merck's 'net price increase' across portfolio in
2017, it was already meeting the criteria that Merck outlined
today." he said.
Zepatier had total U.S. sales of $771 million in 2017. Merck's
overall annual sales exceed $40 billion. Its most important product,
the cancer drug Keytruda, lists for about $150,000 a year.
Trump, who has vowed to help reduce the cost of prescription drugs
to consumers, expressed anger at drugmakers over planned price
hikes. In a tweet on July 9, he said they "should be ashamed" and
that his administration would respond.
Under direct pressure from Trump, Pfizer Inc, the largest U.S.
drugmaker, said it would delay July 1 price increases until the end
of the year or until the president's blueprint for lowering drug
costs goes into effect.
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Swiss drugmaker Novartis followed this week, saying it would not
raise prices in the United States for the rest of the year.
Although Pfizer and Novartis only promised delays to price hikes,
Trump said they decided to not increase prices. He has not yet
commented on Merck's announcement.
"This decision (by Merck) is a response to President Trump's
blueprint and reflects the industry's understanding that the
President is serious about bringing change to our drug markets,"
U.S. Health and Human Services Secretary Alex Azar said in a
statement.
Trump made lowering prescription drug prices a top 2016 presidential
campaign issue.
In May, he unveiled a "blueprint" to lower drug prices that appeared
to largely spare drugmakers and instead took aim at "middlemen,"
such as health insurers and pharmacy benefits managers, which demand
hefty rebates in exchange for broad access to patients.
Pharmaceutical company stocks rose after the blueprint was
announced.
The cost of healthcare is expected to be a major campaign issue
ahead of November midterm elections, with control of the House of
Representatives and the Senate, both currently controlled by Trump's
fellow Republicans, potentially up for grabs.
(Reporting By Yasmeen Abutaleb; Editing by Bill Berkrot)
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