Pfizer 2Q profit surges, company sees drug rebates ending
Pfizer's top executives are predicting the Trump administration will try to eliminate big rebates off prescription drug prices that manufacturers pay to middlemen, a move that could sharply reduce patients' out-of-pocket costs.
Pfizer shares jumped 3 percent on the comments, made to analysts during a conference call Tuesday to discuss Pfizer's second-quarter results.
Patient copayments are based on drugs' list prices, and Pfizer Chief Executive Ian Read said about 40 percent of list prices for Pfizer drugs now goes to insurers and prescription benefit managers.
Rebate amounts are a closely guarded secret. Patients rarely get any of that money back, yet have been paying bigger percentages of their medicine bills as insurance plans shift more costs onto them.
Read told analysts that if the administration changed rules for government insurance programs such as Medicare to eliminate those rebates, private insurance plans likely would follow.
"I do believe that removal of the rebates will be a priority" for the administration, Read said in an interview with The Associated Press.
Read discussed that and other aspects of the administration's plan to reduce drug prices with President Donald Trump during a phone call and then a White House visit, both in July.
Read said ending rebates would help make medicines more affordable for patients, cutting their costs by a similar percentage. Pfizer, the biggest U.S.-based drugmaker, also would benefit. It would then base future drug prices around the current net prices it gets after the rebates and discounts middlemen take, Read said.
Meanwhile, Pfizer reported its second-quarter profit surged 26 percent, thanks to a 4 percent increase in medicine sales, higher income from partnerships and lower tax expenses.
New York-based Pfizer beat Wall Street expectations and boosted its 2018 profit forecast, but trimmed its sales forecast, warning that weakening currencies in Europe and Asia could nick revenue in coming quarters.
The maker of Viagra and advanced breast cancer drug Ibrance earned $3.87 billion, or 65 cents per share, up from $3.07 billion, or 51 cents per share, a year earlier. Adjusted earnings were 81 cents per share, 6 cents better than expected.
Revenue totaled $13.47 billion, up from $12.9 billion in 2017's second quarter. That topped analyst projections for $13.26 billion.
Sales were topped by Pfizer's Prevnar 13 vaccine against ear and other pneumococcal infections, up 8 percent at $1.25 billion, and by its Lyrica capsules for pain and fibromyalgia, though its sales dipped 3 percent to $1.22 billion. Sales of cancer medicines jumped 15 percent to $1.82 billion, led by Ibrance at $1.03 billion. Meanwhile, sales of Eliquis for preventing blood clots and stroke soared 47 percent to $889 million.
Pfizer said it now expects full-year earnings of $2.95 to $3.05 per share, up from its May forecast for $2.90 to $3 per share. But the company lowered its revenue forecast to $53 billion to $55 billion, down from its prior forecast for sales of $53.5 billion to $55.5 billion.
In afternoon trading, Pfizer shares rose $1.08, or 2.8 percent, to $39.68.
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