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

Process of setting the price for breast-cancer treatment shows arcane art behind rising U.S. drug prices

By:  Jonathan D. Rockoff

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.

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