Barron's Streetwise What Pfizer's New Deal Means for Healthcare
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Oct 3, 2025 Evan Seigerman, Head of healthcare research at BMO Capital Markets, dives into the implications of the Trump-Pfizer deal, shedding light on drug-pricing policies and their effects on the industry. He explains 'most favored nation' pricing and how the deal may lower U.S. drug costs without harming pharma profits. The discussion also covers BMO's bullish outlook on Pfizer and Gilead, emphasizing disciplined management and strategic acquisitions. Listeners will gain insights into market reactions to healthcare policies and potential investor opportunities.
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Why U.S. Drug Prices Stay High
- U.S. drug prices are higher than in other developed countries for structural reasons.
- Simple price controls are unlikely to materially change outcomes due to complex pricing channels.
PBMs Obscure Drug Cost Signals
- The pharmacy benefit manager (PBM) system obscures true drug costs and drives patient out-of-pocket prices.
- Removing PBM rebates may shift who gets discounts but won't necessarily cut overall drug spending dramatically.
Don't Chase Sky-High Dividends
- Avoid buying stocks solely for very high dividend yields since high yields often signal business stress.
- Prefer moderate yields and companies with rising dividends for better long-term returns.