Americans with weakened immune systems can now get their rheumatoid arthritis or hepatitis C medications from the United States rather than other countries. Health insurers and the pharmaceutical companies can see a savings of more than $5 billion in drug prices for drugs sold in the United States over the next decade.
That’s because Pfizer and its subsidiary Hospira are selling substantially more than the 6 million U.S. prescriptions of its once-daily copycat version of the medical drug to fill. Now Pfizer and Hospira will boost their production for decades to come by buying more of the company’s other products.
In the second quarter of 2018, Pfizer, the drug industry’s most diversified and profitable company, made almost double what it did in the same period in 2017. Business executives credit Pfizer’s growth to more people using its vaccines and pain medicines.
But all its growth comes from writing more prescriptions for its own drugs rather than selling them elsewhere. These still-emerging medicines grew 10 percent in the quarter and 11 percent for the year to $8.3 billion, more than all of its products combined. Pfizer’s portfolio of drugs under development for diabetes, cancer and pain can improve on and extend the performance of older drugs. If these drugs pan out, they could generate new revenue.
The U.S. Treasury is allowed to purchase medicines in bulk to keep medicine prices down for people who need them. Pfizer and Hospira will no longer have to set prices based on how much they can command on the open market. The lower prices “will provide much needed affordable access for the millions of Americans who will benefit from them,” President Donald Trump said on June 26, before the deal was announced.
That’s a huge deal for drug companies as this cost could be passed onto consumers, and added to the US$11 trillion in national debt, at the same time they brace for a takeover of their pharmaceutical unit by the French drug giant Sanofi.
Already, the U.S. Treasury buys 1.6 billion doses of products annually through its preferred purchase program, providing relief for about 10 million Americans living with critical conditions, the Associated Press reported. The legislation Trump signed into law on Jan. 4—the “21st Century Cures Act”—committed more than $120 billion to expanding access to experimental drugs and helping get them to patients, including through the Treasury’s preferred purchase program.
The Treasury’s purchases of Pfizer’s products, however, will only be temporary as Medicare’s exclusive prescription drug plan transitions to the $15 billion 340B drug price-cut program.
Pfizer’s newer drugs are also helping to more efficiently target patients and doctors, so sales of its brand-name pills aren’t falling in the face of more competition.
“Migraine headache or having a pretty typical cancer treatment,” said Ira Loss, an analyst with Washington Analysis. “They’re not much in demand. These are off-label uses for this product that are being done through Dr.’s offices and sometimes over the phone.”
Though they aren’t as big as Wall Street wants — sales came in at $1.54 billion for the quarter compared to $1.91 billion in the same period last year — Pfizer’s newer drugs could be future revenues for both Pfizer and its biggest shareholders. Pfizer’s stock closed Friday at $31.72 a share, so a price of $80 would mean 20 percent more cash profit for investors.
If Pfizer’s new drugs perform as hoped, or better, their annual sales would more than double. Pfizer will reap half of those sales — $30 billion in 2020 — from these new drugs, a Washington Analysis analysis shows. The rest comes from Pfizer’s main businesses.
Pfizer and Hospira are already transferring part of the savings to patients. They’re lowering prices for the privately acquired Adynxx, a prescription antiviral for pain and hepatitis C; rheumatoid arthritis pill Xeljanz, now twice as expensive to patients as older competitors; and erectile dysfunction drug Viagra, which is much cheaper to patients but much more profitable for Pfizer.
An Adynxx spokeswoman said the company is “focused on