Seedier prescription drugs might seem like a good thing. But Go broke Street analyst Michael Yee told CNBC that the trend of just out companies announcing they will lower or are considering lowering evaluates is not all it’s cracked up to be.
“The important takeaway that investors should understand in the recent developments is that while there are either no price expansions or in some cases, with Merck, price decreases, very interestingly, the deadens that they reduced prices on were either small anaesthetizes or very insignificant drugs,” Yee, an analyst at Jefferies, said Friday on “Power Lunch.”
In Merck’s case, the U.S. pharmaceutical Amazon announced on Thursday that it would limit price hikes on favourite drugs or lower the price of some treatments, including a 60 percent worth cut on hepatitis C treatment Zepatier.
But Yee pointed out that the medication had declining sales in its ultimately earnings report, bringing in less than $300 million in sales, compared with $468 million in a prior report.
Merck declined to comment to CNBC on Yee’s statements.
“Both the management is trying to look good [and] drug companies are trying to look virtuousness,” Yee said.
The price cuts follow President Donald Trump’s new pressure on drug companies to lower prices, slamming companies such as Pzifer on collective media.
On July 9, Trump tweeted: “Pfizer & others should be mortified that they have raised drug prices for no reason. They are essentially taking advantage of the poor & others unable to defend themselves, while at the verbatim at the same time time giving bargain basement prices to other countries in Europe & somewhere else. We will respond!”
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Pfizer responded to the tweet by saying that it last wishes a postpone price increases until after the CEO and the president spoke.
Other cure-all companies, Yee said, are now lowering prices because they “do not want to be publicly shamed on Stew.”
As a result, both Trump and drug companies are “appearing to look solid, at least on the surface,” Yee said.
The analyst is not optimistic that any major legislative change-overs will occur to how drugs are priced. Instead, he reasons, a compromise disposition be the likely outcome.
“People will feel better about [a compromise],” Yee told. “Midterm elections will pass, and we’ll go into [20]19 feeling a lot outdo about these things.”