Even before Pfizer faced the wrath of U.S. President Donald Trump for July price hikes, Novartis decided against putting through more of its own increases in 2018, its helmsman told analysts on Wednesday.
On the company's second-quarter conference call, Novartis CEO Vas Narasimhan said his company eyed the drug pricing environment in the U.S. in June, after the Trump administration released its blueprint to bring down costs. At the time, the company decided suspending price hikes this year would be a "prudent approach given the dynamic environment" for the industry.
Instead, Novartis will "chart a course" for pricing in 2019 and beyond, Narasimhan said. Novartis supports reforms to Medicare Part B, the federal 340B drug pricing program, rebates, biosimilar regulations and other proposals under consideration, he added.
The political move—and policy outline from Narasimhan—comes amid renewed scrutiny of Novartis’ contract with Trump attorney Michael Cohen. Last week, lawmakers reported the company and Cohen interacted far more often than Novartis had initially admitted, and those conversations included drug-pricing proposals, some of which ended up in Trump’s blueprint.
Novartis has already raised stickers on a range of drugs this year. The company hiked prices for 75 medications by 2.9% to 9.9%, according to a January note from Wells Fargo analyst David Maris. For instance, the company boosted the list price of big-selling Cosentyx by 6.5%, and it increased prices on eight of its drugs by 9% or more, Maris wrote.
By deciding against a midyear slate of price raises, Novartis escaped scrutiny in yet another pricing controversy. Pfizer started July with dozens of price hikes, only to have President Donald Trump take the company to task on Twitter. After a phone call with Trump and HHS secretary Alex Azar, Pfizer CEO Ian Read agreed to defer its price hikes till year’s end or until the president’s drug pricing plan goes into effect, whichever is sooner.
Afterward, analysts predicted Pfizer’s move would put a chill on other price hikes by drugmakers this year. In a note on Monday, Bernstein analyst Ronny Gal wrote that the Centers for Medicare and Medicaid Services sent a note to pharma companies warning about further price hikes, and the new developments "have the effect of seeing a patrol car along the highway."
But just as cars speed up after the patrol car recedes in the rear view mirror, the effect will be temporary, Gal figured. "Everyone will slow down for a while, but with time, the price increase will come back," he wrote.
Plus, companies are likely to try to fly under the radar with the increases they take by moving away from their usual schedules. January 1 and July 1, traditionally two popular dates for routine increases, won’t be so popular anymore, Gal figures.
Some companies have already seemingly escaped criticism from the administration on recent price hikes. Roche, Celgene and Novo Nordisk were among the large drugmakers that implemented price increases in recent weeks, according to reports.
Meanwhile, Novartis' decision comes as the global drug giant continues to face scrutiny over its consulting deal with Trump's former personal attorney Michael Cohen. In a report published Friday, Senate Democrats said the company's interactions with Cohen were "longer and more detailed" than Novartis originally let on.
Amid a firestorm over the consulting deal back in May, Novartis said it determined after one meeting—on March 1, 2017—that Cohen couldn't provide the healthcare consulting help it sought. The company said it paid the lawyer $1.2 million to get insight into how the Trump Administration would approach healthcare, admitting the deal was a mistake.
But the senators' report concluded Cohen and former Novartis CEO Joseph Jimenez interacted on multiple occasions between April 2017 and September 2017, communicating about drug pricing and other issues.
On pricing, the senato...
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