Politics

In another win for Trump, Merck takes the drug pricing pledge. Its cuts are a joke, but is this an industry tipping point?

You can add Merck to the list of pharma giants taking the pledge to either hold off on any price hikes or moving to cut them. And there are growing signs that other majors may soon join the party as at least one top exec reportedly met with President Donald Trump at the White House Thursday.

Following the lead of Pfizer and Novartis, Merck put out a statement Thursday afternoon that it has committed to hold the line on any drug price hikes to the average inflation rate. In addition, they have a special in mind. The company is slashing the price of their hep C combo Zepatier by 60% while also promising a 10% cut on other therapies.

And they are not done.

The Merck products selected were based on a range of factors including the gap between list price and actual discounted (net) prices paid in the market, the contractual obligations under existing arrangements with payers, and the opportunity to broaden access to treatment.

Going forward, we will continue to evaluate our portfolio of products to look for opportunities to further reduce costs for patients and the health care system.

There’s been a considerable amount of scoffing by industry observers about these pricing promises, particularly as it related to Pfizer CEO Ian Read’s promise to hold the line for just a few months. Novartis also was subjected to considerable scorn for offering to rein it in, after raising prices only recently.

In this case, Merck is cutting the price of a drug that contributes only a tiny slice of its revenue — and which is fast fading to nothing — in a disease arena dominated by Gilead and AbbVie. Hep C was already a loser. And its other 5 drugs in the cutting block are reportedly off patent, meaning they are giving up precisely nothing in the way of meaningful cuts.

Merck’s move, though, may indicate that a fundamental biopharma shift is underway as the industry deals with the direct assault mounted by President Trump. Trump may not ever get the free-falling prices he promised were on the way, but market leaders are falling into line in what may yet prove to be a durable truce on the drug price debate.

And love him or hate him, that’s a big win for Trump — even if this is just optics for now. HHS Secretary Alex Azar was quick to boast about it on Twitter:

The President’s plan is working—drug prices are coming down. Thanks Merck for lowering prices on 6 drugs, including a Hepatitis C drug by 60% and committing to keep future price increases below inflation. Looking forward to others doing the same to put American Patients First!

Trump — who earlier excoriated Pfizer after news of price hikes hit — also expressed his appreciation in a new Tweet of his own:

According to Politico, Read met with Trump today in Washington DC as top CEOs in the industry hunkered down in a PhRMA strategy session.

There’s no love lost between Merck CEO Ken Frazier and Trump. Frazier distanced himself from the White House after the controversy over the president’s remarks about the activities of extremist groups during a deadly protest in Virginia. That almost certainly rules out a direct call to Frazier from Trump.

I’ve asked Merck, though, if anyone in the administration — perhaps Azar — had been in touch. No one has responded.


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