Pfizer Wants to Be Your Pfriend

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The pharmaceutical industry has become a punching bag for politicians pandering for votes with ridiculous re-importation schemes. Brian Gorman and Bill Mann have written excellent articles on why such government intervention simply won't work. Nevertheless, our elected officials never let common sense get in the way of legislating, so price controls and re-importation remain on the table.

In addition to the troubles with the politicians, pharma companies are also facing a major public relations crisis, with their popularity about on par with anyone caught clubbing a baby seal. This is amazing considering that these are the companies developing drugs that improve our quality of life.

The drug industry needs to get off the defensive and take proactive measures to address these problems. Today, Pfizer (NYSE: PFE) took a major step in the right direction. Next month, it's launching the "Pfizer Pfriends" program to make its drugs more affordable for tens of millions of uninsured Americans.

Families without insurance that make under $45,000 a year will be able to buy drugs at the same price as the HMOs. The average savings on prescription drugs will be 37%. Even families that earn more than $45,000 will be eligible for a 15% discount off retail prices if they do not have drug coverage. In addition, for low-income households, Pfizer is expanding access to drugs available at no cost.

I cannot see any negatives with Pfizer's strategy here. It fills a major need in our society by providing drugs at a lower cost to the uninsured. That's a move that should improve its public image. Also, if the program takes off, it could short-circuit the threats of re-importation and price controls. It seems that in a sense Pfizer is limiting its profits in certain markets on its own terms in the hopes that concessions will be sufficient to keep from being handcuffed by Congress.

In addition to the public health benefits, I also see this as a shrewd business move, as it could increase the usage of its products among the uninsured. Pfizer competes with drug giants such as GlaxoSmithKline (NYSE: GSK), Eli Lilly (NYSE: LLY), and Merck (NYSE: MRK). All of these companies have drug access programs for the low-income uninsured, but Pfizer's program seems to raise the bar by offering discount rates to all uninsured people, not just those with low incomes.

Merck is a Motley Fool Income Investor recommendation. Check it out by signing up for a free 30-day trial.

Fool contributor Charly Travers does not own shares of any company mentioned in this article.