Allergan CEO promises to limit price hikes on drugs in a bid to rebuild the ‘social contract’
Original article posted on STAT
Seeking to deflect harsh criticism of the pharmaceutical industry, one chief executive officer — Allergan’s Brent Saunders — has taken the unusual step of promising to avoid “price gouging” and agreed to limit price hikes on brand-name medicines.
In a blog post on the company website on Tuesday, Saunders wrote that Allergan — which is probably best known for selling Botox — would not raise prices more than once a year and that any price hikes will be limited to single-digit percentage increases.
And Saunders also committed to avoiding “major” prices hikes without any corresponding increases in costs as products near patent expiration. Drug makers often raises prices as medicines are about to lose patent protection in order to extract as much revenue as possible before generic competition arrives.
“The health care industry has had a longstanding unwritten social contract with patients, physicians, policy makers, and the public at large,” Saunders wrote. “Those who have taken aggressive or predatory price increases have violated this social contract!”
His missive comes as the national debate over the cost of prescription medicines becomes a crisis for the pharmaceutical industry.
The issue has been accelerating for some time, but has reached a feverish pitch over the past year after Valeant Pharmaceuticals and Turing Pharmaceuticals, which had been run by Martin Shkreli, bought old drugs and quickly jacked up the prices to sky-high amounts.