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Pfizer Amends U.S. Government Paxlovid Supply Agreement and Updates Full-Year 2023 Guidance

October 14, 2023 Off By BusinessWire
  • Removes a Significant Uncertainty by Providing Pathway to U.S. Commercialization of Paxlovid on January 1, 2024 with Amended Supply Agreement

    • In a Non-Cash Transaction, U.S. Government to Return Estimated 7.9 Million EUA-Labeled Paxlovid Treatment Courses at end of 2023 and Receive Credit for Future NDA-labeled Treatment Courses from Pfizer
    • Credit will Support a Patient Assistance Program to Provide Paxlovid Free of Charge to Federally Insured Patients through 2024, and Uninsured/Underinsured Patients through 2028, with Pfizer to Recognize Revenue as Product is Delivered
    • Pfizer to Commercialize Paxlovid for the Treatment of Privately Insured Commercial Patients with Prices to be Negotiated with Payers
    • Pfizer to Provide U.S. Government with 1.0 Million Treatment Courses for a Strategic National Stockpile
  • Updates Full-Year 2023 Guidance(1)

    • Revises 2023 Revenue Guidance(1) Range to $58.0 to $61.0 Billion Solely due to COVID Products

      • Reduces Guidance(1) for Paxlovid Revenues by Approximately $7.0 Billion, which includes a $4.2 Billion Non-Cash Revenue Reversal for the Return of Approximately 7.9 Million Treatment Courses of EUA-Labeled U.S. Government Inventory
      • Reduces Guidance(1) for Comirnaty Revenues by Approximately $2.0 Billion
    • Records $5.5 Billion Non-Cash Charge in 2023 Third Quarter Primarily for COVID Inventory Write-Offs due to Lower-Than-Expected Demand
    • Reaffirms Full-Year 2023 Non-COVID Product Operational Revenue Growth Expectations of 6% to 8%
    • Launches Enterprise-Wide Cost Realignment Program Expected to Deliver Targeted Savings of at least $3.5 Billion, of which Approximately $1.0 Billion is Expected to be Realized in 2023 and at least $2.5 Billion is Expected to be Realized in 2024
    • Revises 2023 Adjusted(2) Diluted EPS Guidance(1) to $1.45 to $1.65 to Account for Lower Expected Revenues for COVID Products and Inventory Write-Offs, Partially Offset by $1.0 Billion of Anticipated 2023 Cost Reductions
  • Pfizer to hold analyst and investor call at 8 a.m. EDT Monday, October 16, 2023

NEW YORK–(BUSINESS WIRE)–Pfizer Inc. (NYSE:PFE) today announced that it has amended its supply agreement with the U.S. government for Paxlovid, the first oral antiviral pill approved by the U.S. Food and Drug Administration (FDA) and is updating its Full-Year 2023 Guidance.


Paxlovid Amended Agreement with U.S. Government Facilitates Commercialization

At the end of 2023, Pfizer will accept a non-cash return of any remaining Emergency Use Authorized (EUA)-labeled U.S. government inventory, estimated to be 7.9 million treatment courses, and in the fourth quarter, will reverse the associated revenues currently estimated to be approximately $4.2 billion.

The commercial transition will begin in November 2023, as the U.S. government begins to discontinue the distribution of EUA-labeled Paxlovid. Pfizer will ensure commercial readiness by providing NDA-labeled commercial supply to all channels by the end of 2023, however, EUA-labeled Paxlovid will remain available free-of-charge to all eligible patients until the end of the year, and therefore Pfizer expects only minimal uptake of NDA-labeled commercial product before January 1, 2024.

Any remaining EUA-labeled treatment courses previously purchased by the U.S. government will be converted to a volume-based credit. This credit will support continued access to Paxlovid through a patient assistance program (PAP) operated by Pfizer on behalf of the U.S. government. As part of the PAP, all federally insured patients (Medicare and Medicaid) and the uninsured will receive Paxlovid, free of charge, through 2024. Beginning in 2024, Pfizer will sell Paxlovid to privately insured patients (commercial) with prices to be negotiated with payers and offer a copay program through 2028. The PAP will continue to provide access to Paxlovid to eligible uninsured and underinsured patients through that same period.

Additionally, Pfizer will manage and supply 1.0 million treatment course U.S. Strategic National Stockpile (SNS) to enable future pandemic preparedness and refresh stock prior to expiry through 2028.

Pfizer will recognize revenues as product is delivered beginning in 2024.

Updates Outlook for COVID-19 Products

Pfizer also announced additional clarity on its full-year 2023 outlook for its COVID products – Comirnaty and Paxlovid. Clarity on the underlying vaccination and treatment rates will be observed by year end and will set a reliable base for the prediction of future product utilization.

As previously announced, the European Union (EU) contract for Comirnaty supply was renegotiated with amended purchasing obligations through 2026. The U.S. market for Comirnaty transitioned to commercially available product in September 2023. Due to the recent commencement of the fall vaccination period, the outlook for year-end vaccination rates and market shares requires more time for more determinable estimates.

As previously announced, Paxlovid also received full NDA approval from the FDA earlier this year. The global utilization rates for Paxlovid are currently trending slightly above last year’s utilization but lower than our original expectations.

Launches Cost Realignment Program

In addition, in the fourth quarter of 2023, Pfizer announced that the company has launched a multi-year, enterprise-wide cost realignment program that will realign its costs with its longer-term revenue expectations. The program is expected to deliver targeted savings of at least $3.5 billion, of which $1.0 billion is expected to be realized in 2023 and an additional $2.5 billion is expected to be realized in 2024. The one-time costs to achieve the savings associated with the new cost realignment program are expected to be approximately $3.0 billion, of which the majority is expected to be cash. These costs will primarily include severance and implementation costs. Pfizer will continue to refine the estimated targeted savings and their associated costs over the remainder of the year and will incorporate them into its full-year guidance for 2024.

Updates Full-Year 2023 Revenue and Adjusted(2) Diluted EPS Guidance(1) Ranges

Pfizer also announced that it now anticipates full-year 2023 revenues to be in the range of $58.0 to $61.0 billion, versus its previous guidance range of $67.0 to $70.0 billion solely due to its COVID products. Full-year 2023 revenues for Paxlovid and Comirnaty are expected to be approximately $12.5 billion, a decline of $9.0 billion versus original expectations. The company is reducing its full-year 2023 revenue expectations for Paxlovid by approximately $7.0 billion which includes a non-cash $4.2 billion revenue reversal for the return of the 7.9 million treatment courses of EUA-labeled U.S. government inventory, as well as the delayed commercialization to January 2024 versus our previous expectation of commercialization in the second half of 2023. The company is also reducing its full-year 2023 revenue expectations for Comirnaty by approximately $2.0 billion due to lower-than-expected vaccination rates.

Pfizer’s non-COVID products remain on track to achieve an expected 6% to 8% operational revenue growth year over year in 2023.

Due to lower-than-expected utilization for our COVID products, Pfizer recorded a non-cash charge of $5.5 billion to Cost of Goods Sold in the third quarter of 2023 primarily related to inventory write-offs for Paxlovid of $4.6 billion and to a lesser extent for inventory write-offs and other charges for Comirnaty of $0.9 billion.

The company expects to deliver approximately $1.0 billion in savings in 2023 through its cost realignment program.

Revised guidance also reflects anticipated improvement in our Effective Tax Rate on Adjusted(2) Income for 2023 from approximately 15% in our original guidance to approximately 12%.

Due to the aforementioned items, the company now expects full-year 2023 Adjusted(2) diluted EPS to be in the range of $1.45 to $1.65 versus its original guidance range of $3.25 to $3.45.

The Company’s updated Revenues and Adjusted(2) diluted EPS guidance(1) is presented below.

 

2023

Previous Guidance(1)
(August 1, 2023)

  

One-Time

Items(a)

  

All Other

Adjustments(b)

  

2023

Revised Guidance(1)

Revenues*

  

$67.0 to $70.0 billion

 

-$(4.2) billion

 

~$(4.8) billion

 

$58.0 to $61.0 billion

Non-cash Inventory Write-offs(a)

  

 

 

$5.5 billion

 

 

 

 

Adjusted(2) Diluted EPS*

  

$3.25 to $3.45

 

$(1.46)

 

$(0.34)

 

$1.45 to $1.65

(a) One-time items include approximately $4.2 billion of a non-cash revenue reversal related to the return of an estimated 7.9 treatment courses of U.S. government EUA-labeled Paxlovid and a non-cash $5.5 billion inventory write-off of COVID products.

(b) All other adjustments include approximately $4.8 billion reduction in COVID product revenue due to the delayed commercialization of Paxlovid to January 2024 versus our previous expectation of commercialization in second half of 2023 as well as lower-than-expected vaccination rates for Comirnaty partially offset by $1.0 billion in anticipated savings from the cost realignment program.

* Changes in foreign exchange rates have had a minimal incremental impact since full-year 2023 guidance was issued. Please refer to Press Release Footnote (1) for additional information.

Executive Commentary

Dr. Albert Bourla, Pfizer Inc. Chairman and Chief Executive Officer, stated: “Pfizer’s non-COVID product portfolio remains strong, and we continue to expect these products to achieve year-over-year operational revenue growth in the range of 6% to 8% in 2023.

“At the same time, this agreement with the U.S. government makes it easier for patients to access Paxlovid; enables the United States to have a robust stockpile for future use; and provides Pfizer with greater clarity regarding the transition to a commercial market for this important treatment, which has helped remove some of the uncertainty around our business expectations for our COVID products. We expect additional clarification on global vaccination and treatment rates by the end of the year, which we expect will be a good predictor of utilization in future years.

“We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control. Over the past several years, we have continued to ensure supply readiness for our COVID products, and as we gain additional clarity around vaccination and treatment rates for COVID, we will be better able to estimate the appropriate level of supply to meet demand and continue to address any ongoing public health needs. As a result, we continue to expect our COVID-related revenues to contribute to our business in future periods, helping us to further invest in activities that drive Pfizer’s long-term growth potential.”

Pfizer intends to provide additional commentary and all components of its updated full-year 2023 guidance in its Third-Quarter 2023 Performance Report to be issued on Tuesday, October 31, 2023.

Investor Call Details

Pfizer Inc. invites investors and the general public to view and listen to a webcast of a live conference call with investment analysts at 8 a.m. EDT on Monday, October 16, 2023.

To view and listen to the webcast visit Pfizer’s web site at www.pfizer.com/investors. Information on accessing and pre-registering for the webcast, including dial-in numbers, will be available at www.pfizer.com/investors and participants are advised to pre-register in advance of the conference call.

The transcript and webcast replay of the call with be made available on Pfizer’s web site at www.pfizer.com/investors within 24 hours after the end of the live conference call and will be accessible for at least 90 days.

(1) Pfizer does not provide guidance for GAAP Reported financial measures (other than revenues and acquired in-process R&D (IPR&D) expenses) or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP Reported financial measures on a forward-looking basis because it is unable to predict with reasonable certainty the ultimate outcome of unusual gains and losses, certain acquisition-related expenses, gains and losses from equity securities, actuarial gains and losses from pension and postretirement plan remeasurements, potential future asset impairments and pending litigation without unreasonable effort. These items are uncertain, depend on various factors, and could have a material impact on GAAP Reported results for the guidance period.

Financial guidance for full-year 2023 reflects the following:

  • Exchange rates assumed are a blend of actual rates in effect through the second quarter of 2023 and end of September 2023 rates for the remainder of the year. Financial guidance reflects the anticipated unfavorable impact of approximately $1.0 billion on revenues and approximately $0.19 on Adjusted(2) diluted EPS as a result of changes in foreign exchange rates relative to the U.S. dollar compared to foreign exchange rates from 2022.
  • Guidance for Adjusted(2) diluted EPS assumes diluted weighted-average shares outstanding of approximately 5.72 billion shares, and assumes no share repurchases in 2023.

(2) Adjusted income and Adjusted diluted EPS are defined as U.S. GAAP net income attributable to Pfizer Inc. common shareholders and Reported diluted EPS attributable to Pfizer Inc. common shareholders before the impact of amortization of intangible assets, certain acquisition-related items, discontinued operations and certain significant items. Adjusted income and its components and Adjusted diluted EPS measures are not, and should not be viewed as, substitutes for U.S. GAAP net income and its components and diluted EPS. See the Non-GAAP Financial Measure: Adjusted Income section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in Pfizer’s 2022 Annual Report on Form 10-K for a definition of each component of Adjusted income as well as other relevant information.

INDICATION, AUTHORIZED USE AND IMPORTANT SAFETY INFORMATION FOR PAXLOVID

U.S. Indication

PAXLOVID is indicated for the treatment of mild-to-moderate coronavirus disease 2019 (COVID-19) in adults who are at high risk for progression to severe COVID-19, including hospitalization or death.

Limitations of Use

PAXLOVID is not approved for use as pre-exposure or post-exposure prophylaxis for prevention of COVID-19.

U.S. FDA Emergency Use Authorization

The U.S. Food and Drug Administration (FDA) has issued an Emergency Use Authorization (EUA) for the emergency use of PAXLOVID for the treatment of adults and pediatric patients (12 years of age and older weighing at least 40 kg) with mild to moderate coronavirus disease 2019 (COVID-19) and who are at high risk for progression to severe COVID-19, including hospitalization or death.

PAXLOVID has not been approved, but has been authorized for emergency use by FDA under an EUA, for the treatment of mild-to-moderate COVID-19 in pediatric patients (12 years of age and older weighing at least 40 kg) who are at high risk for progression to severe COVID-19, including hospitalization or death. The emergency use of PAXLOVID is only authorized for the duration of the declaration that circumstances exist justifying the authorization of the emergency use of drugs and biological products during the COVID-19 pandemic under Section 564(b)(1) of the Act, 21 U.S.C. § 360bbb-3(b)(1), unless the declaration is terminated or authorization revoked sooner.

IMPORTANT SAFETY INFORMATION

WARNING: SIGNIFICANT DRUG INTERACTIONS WITH PAXLOVID

  • PAXLOVID includes ritonavir, a strong CYP3A inhibitor, which may lead to greater exposure of certain concomitant medications, resulting in potentially severe, life-threatening, or fatal events
  • Prior to prescribing PAXLOVID: 1) Review all medications taken by the patient to assess potential drug-drug interactions with a strong CYP3A inhibitor like PAXLOVID and 2) Determine if concomitant medications require a dose adjustment, interruption, and/or additional monitoring
  • Consider the benefit of PAXLOVID treatment in reducing hospitalization and death, and whether the risk of potential drug-drug interactions for an individual patient can be appropriately managed

PAXLOVID is contraindicated in patients with a history of clinically significant hypersensitivity reactions (eg, toxic epidermal necrolysis or Stevens-Johnson syndrome) to its active ingredients (nirmatrelvir or ritonavir) or any other components of the product. If signs and symptoms of a clinically significant hypersensitivity reaction or anaphylaxis occur, immediately discontinue PAXLOVID and initiate appropriate medications and/or supportive care.

PAXLOVID is contraindicated with drugs that are primarily metabolized by CYP3A and for which elevated concentrations are associated with serious and/or life-threatening reactions and drugs that are strong CYP3A inducers where significantly reduced nirmatrelvir or ritonavir plasma concentrations may be associated with the potential for loss of virologic response and possible resistance. There are certain other drugs for which concomitant use with PAXLOVID should be avoided and/or dose adjustment, interruption, or therapeutic monitoring is recommended. Drugs listed here are a guide and not considered a comprehensive list of all drugs that may be contraindicated with PAXLOVID. The healthcare provider should consult other appropriate resources such as the prescribing information for the interacting drug for comprehensive information on dosing or monitoring with concomitant use of a strong CYP3A inhibitor like PAXLOVID.

Drugs that are primarily metabolized by CYP3A for which elevated concentrations are associated with serious and/or life-threatening reactions:

  • Alpha 1-adrenoreceptor antagonist: alfuzosin
  • Antianginal: ranolazine
  • Antiarrhythmic: amiodarone, dronedarone, flecainide, propafenone, quinidine
  • Anti-gout: colchicine (in patients with renal and/or hepatic impairment)
  • Antipsychotics: lurasidone, pimozide
  • Benign prostatic hyperplasia agents: silodosin
  • Cardiovascular agents: eplerenone, ivabradine
  • Ergot derivatives: dihydroergotamine, ergotamine, methylergonovine
  • HMG-CoA reductase inhibitors: lovastatin, simvastatin (these drugs can be temporarily discontinued to allow PAXLOVID use)
  • Immunosuppressants: voclosporin
  • Microsomal triglyceride transfer protein inhibitor: lomitapide
  • Migraine medications: eletriptan, ubrogepant
  • Mineralocorticoid receptor antagonists: finerenone
  • Opioid antagonists: naloxegol
  • PDE5 inhibitor: sildenafil (Revatio®) when used for pulmonary arterial hypertension
  • Sedative/hypnotics: triazolam, oral midazolam
  • Serotonin receptor 1A agonist/serotonin receptor 2A antagonist: flibanserin
  • Vasopressin receptor antagonists: tolvaptan

Drugs that are strong CYP3A inducers: PAXLOVID cannot be started immediately after discontinuation of any of the following medications due to the delayed offset of the recently discontinued CYP3A inducer:

  • Anticancer drugs: apalutamide

    Anticonvulsant: carbamazepine, phenobarbital, primidone, phenytoin
  • Antimycobacterials: rifampin, rifapentine
  • Cystic fibrosis transmembrane conductance regulator potentiators: lumacaftor/ivacaftor
  • Herbal Products: St. John’s Wort (hypericum perforatum)

Risk of Serious Adverse Reactions Due to Drug Interactions: Initiation of PAXLOVID, which contains ritonavir, a strong CYP3A inhibitor, in patients receiving medications metabolized by CYP3A or initiation of medications metabolized by CYP3A in patients already receiving PAXLOVID, may increase plasma concentrations of medications metabolized by CYP3A. Medications that induce CYP3A may decrease concentrations of PAXLOVID. These interactions may lead to:

  • Clinically significant adverse reactions, potentially leading to severe, life-threatening, or fatal events from greater exposures of concomitant medications
  • Loss of therapeutic effect of PAXLOVID and possible development of viral resistance

Severe, life-threatening, and/or fatal adverse reactions due to drug interactions have been reported in patients treated with PAXLOVID. The most commonly reported concomitant medications resulting in serious adverse reactions were calcineurin inhibitors (eg, tacrolimus, cyclosporine), followed by calcium channel blockers.

Hepatotoxicity: Hepatic transaminase elevations, clinical hepatitis, and jaundice have occurred in patients receiving ritonavir. Therefore, caution should be exercised when administering PAXLOVID to patients with pre-existing liver diseases, liver enzyme abnormalities, or hepatitis. Because nirmatrelvir is coadministered with ritonavir, there may be a risk ofHIV-1 developing resistance to HIV protease inhibitors in individuals with uncontrolled or undiagnosed HIV-1 infection.

The most common adverse reactions in the PAXLOVID group (≥1%) that occurred at a greater frequency than in the placebo group were dysgeusia (5% and <1%, respectively) and diarrhea (3% and 2%, respectively).

The following adverse reactions have been identified during use of PAXLOVID under Emergency Use Authorization:

Immune System Disorders: Anaphylaxis, hypersensitivity reactions

Skin and Subcutaneous Tissue Disorders: Toxic epidermal necrolysis, Stevens-Johnson syndrome

Nervous System Disorders: Headache

Vascular Disorders: Hypertension

Gastrointestinal Disorders: Abdominal pain, nausea, vomiting

General Disorders and Administration Site Conditions: Malaise

PAXLOVID is a strong inhibitor of CYP3A, and an inhibitor of CYP2D6, P-gp, and OATP1B1. Coadministration of PAXLOVID with drugs that are primarily metabolized by CYP3A and CYP2D6 or are transported by P-gp or OATP1B1 may result in increased plasma concentrations of such drugs and increase the risk of adverse events. Coadministration with other CYP3A substrates may require a dose adjustment or additional monitoring.

Pregnancy: Available data on the use of nirmatrelvir during pregnancy are insufficient to evaluate for a drug-associated risk of major birth defects, miscarriage, or adverse maternal or fetal outcomes. Published observational studies on ritonavir use in pregnant women have not identified an increase in the risk of major birth defects. Published studies with ritonavir are insufficient to identify a drug-associated risk of miscarriage. There are maternal and fetal risks associated with untreated COVID-19 in pregnancy.

Lactation: There are no available data on the presence of nirmatrelvir in human or animal milk, the effects on the breastfed infant, or the effects on milk production. A transient decrease in body weight was observed in the nursing offspring of rats administered nirmatrelvir. Limited published data report that ritonavir is present in human milk. There is no information on the effects of ritonavir on the breastfed infant or the effects of the drug on milk production. The developmental and health benefits of breastfeeding should be considered along with the mother’s clinical need for PAXLOVID and any potential adverse effects on the breastfed infant from PAXLOVID or from the underlying maternal condition.

Contraception: Use of ritonavir may reduce the efficacy of combined hormonal contraceptives. Advise patients using combined hormonal contraceptives to use an effective alternative contraceptive method or an additional barrier method of contraception.

Pediatrics: The optimal dose of PAXLOVID has not been established in pediatric patients.

Contacts

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[email protected]
+1 (212) 733-1226

Investor Contact:

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+1 (212) 733-4848

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