How Pfizer Set the Cost of Its New Drug at $9,850 a Month

Dec 9, 2015

The Wall Street Journal
How Pfizer Set the Cost of Its New Drug at $9,850 a Month
By Jonathan Rockoff
December 9, 2015
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Days before Pfizer Inc. was to set the price for a new breast-cancer drug called Ibrance, it got a surprise: A competitor raised the monthly cost of a rival treatment by nearly a thousand dollars.

Three years of market research—a stretch that started almost as soon as the new treatment showed promise in the laboratory—was suddenly in doubt. After carefully calibrating the price to be close to rivals and to keep doctors and insurers happy, Pfizer was left wondering if its list price of $9,850 a month for the pills was too low.

“What do you think if we take that up?” asked Albert Bourla, Pfizer’s executive overseeing cancer drugs, speaking to his colleagues at the final price-setting meeting last January.

It was a tricky issue. Drug companies have been reaching for new heights of pricing. They routinely raise the cost of older medicines and then peg new ones to these levels.

Yet Pfizer knew setting a price too high for Ibrance might backfire. It could antagonize doctors and prompt health insurers to make prescribing the pills a cumbersome process with extra paperwork that doctors dislike.

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