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Pharmaceutical industry

Pharmaceutical Giant Pfizer Faces Pressure on Drug Prices

Strategic Insights

— 1 min read

Pharmaceutical giant Pfizer Inc. faced criticism and pressure at its annual shareholders meeting in Missouri, as Minnesota Governor Tim Pawlenty called for limiting drug price hikes to inflation level. The governor, who owns $463 million in Pfizer stock, invited shareholders to work with the company to lower prices and allow U.S. consumers to buy drugs from Canadian pharmacies. Despite a brief and measured approach, Pawlenty's message sparked a confrontation with Pfizer CEO Hank McKinnell, who dismissed the proposal as bad policy and election-year politics. McKinnell claimed that foreign countries with national health systems should pay more for developing cutting-edge drugs, arguing that their citizens do not pay their fair share of the costs.

Key Takeaways:

  • Governor Tim Pawlenty called for limiting drug price hikes to inflation level, citing the need for more affordable prescription medications for U.S. consumers.
  • Pawlenty's proposal received 5 percent support from shareholders, with the governor stating that "this is a fight we are going to win" and that the goal is to make prescription drugs more affordable.
  • Pfizer CEO Hank McKinnell dismissed the proposal, arguing that it is a trade issue and that foreign countries with national health systems should pay more for cutting-edge drugs.
  • The price differential between the United States and Canada is estimated to be 30-40 percent, with some drugs even cheaper in Europe.
  • Pfizer reported sales of $45.2 billion in 2003 and will spend nearly $8 billion on R&D in 2004.
  • Illinois Governor Rod Blagojevich is sending a delegation to Europe to research the safety of importing drugs from EU counties, with the potential to save $91 million per year for 230,000 state workers and retirees.

Statistics:

  • 30-40 percent: estimated price differential between the United States and Canada
  • $45.2 billion: Pfizer's reported sales in 2003
  • $8 billion: Pfizer's planned R&D spending in 2004
  • $1.7 billion: estimated investment in developing a new drug
  • 15 years: estimated time required to bring a new drug to market
  • $91 million: potential savings for Illinois state workers and retirees by importing prescription drugs from EU counties
  • 230,000: number of Illinois state workers and retirees who could benefit from importing prescription drugs

Sources:

  • UPI article, "Pawlenty calls for price control on prescription drugs, 2004
  • St. Paul Pioneer Press interview with Pfizer CEO Hank McKinnell, 2004
  • UPI article, "Illinois governor explores importing prescription drugs from EU counties"

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