The good news about drug pricing pressure, according to Merck & Co. CEO Ken Frazier? It won’t get much worse.
Merck, along with its biopharma peers, has faced increasing price resistance since some high-profile controversies in 2015 triggered a public outcry. As the industrywide controversy continued—and politicians, including President Donald Trump, vowed to crack down on pharma—the company published a “transparency report” last year disclosing 40.9% rebates overall, up from 27.3% in 2010.
But Frazier sees no sign that payers or politicians will tighten the clamps further in 2018.
“While we are going to continue to see incremental pressure on pricing, I don’t see anything from the public agencies or through the private payers, any kind of significant jump in that pressure,” he said Monday during a Q&A-style session at the annual J.P. Morgan Healthcare Conference.
Beyond the price-hike controversies, payers have been zeroing in on some competitive drug categories, including diabetes, to wring big discounts out of drugmakers in return for formulary exclusives or better coverage. And as many critics have blasted pharma for raising their prices, the industry has sought to argue that middlemen are playing a role in growing prices.
Merck’s “transparency report” highlighted its yearly increases at a portfolio level. For 2016, the company increased its U.S. prices by 9.6% on average before discounts. Payer negotiations brought the net price hikes to a 5.5% increase on average, according to the report.
There’s one area where Merck will definitely see less pressure in 2018 than it did last year, Frazier said, and that’s taxes, thanks to the Republican tax plan. Merck’s overall tax rate “will be lower with this legislation compared to what it would have been without the legislation.”
“It doesn’t really change our capital allocation strategy per se,” Frazier said.
But it does give Merck increased flexibility for dealmaking, he noted. In the wake of tax reform, many industry watchers have predicted that 2018 will bring a new wave of M&A. For two years, as dealmakers awaited results from the U.S. election and then on tax cuts, the industry has been largely quiet on big M&A moves. Now, according to Frazier, that could change.
Asked whether he believes the industry is poised for consolidation, Frazier said he believes the conditions are right, but cautioned that Merck “will continue to be focused on innovation, not consolidation, as our strategy.”
By Eric Sagonowsky
Source: Fierce Pharma
CureVac and the University of Texas’s MD Anderson Cancer Center have announced a co-development and licensing agreement to develop novel messenger ribonucleic acid (mRNA)-based cancer vaccines. The strategic collaboration will focus on the development of differentiated cancer vaccine candidates in selected haematological and solid tumour indications with high unmet medical needs.
FUJIFILM Corporation is planning to invest $1.2 billion to expand the planned FUJIFILM Diosynth Biotechnologies manufacturing facility in Holly Springs, North Carolina, US. This news follows the organisation’s announcement of a $2 billion investment in the facility in March 2021. This additional financial boost totals the investment to over $3.2 billion, FUJIFILM confirmed.
Sanofi’s global restructuring and downsizing is now fully underway, with layoffs stretching to the company’s Belgian offices. Belgian newspaper De Tijd reports that 67 employees have been laid off at a site in Ghent and 32 jobs are on the chopping block at Sanofi’s Belgium HQ in Diegem.
