Allergan, true to its 'social contract' pledge, rolls out sub-10% price increases for 2017

Allergan was the first pharma chief to promise to limit his company's hikes, at a time when all eyes were on pharma and its pricing practices.

Back in September, Allergan promised to limit price increases as part of a “social contract” with patients. And now it’s making good on its word.

The company hiked prices on a crop of its branded meds for 2017, with the new stickers effective as of Jan. 1. But in line with its vows, it kept the gross jack-ups in below 10% and stayed away any major moves on products nearing the end of their patent lives.

As Evercore ISI Analyst Umer Raffat pointed out in his own research note, a few of Allergan’s products took price increases less than 12 months after the prior ones, making the “annualized impact ... greater on those for 2017.”

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If Allergan follows through on its pricing pledges, that won’t happen again. It has promised to raise prices only once per year.

This round, Allergan's list prices for beta blocker Bystolic, contraceptive Lo Loestrin Fe and eye blockbuster Restasis, among others, headed north by 9%, Jefferies analyst David Steinberg wrote in a note to clients. Prices on key GI product Linzess and Alzheimer’s med Namenda XR shot up by 9.5%.

Allergan CEO Brent Saunders was the first pharma chief to promise to limit his company's hikes, at a time when all eyes were on pharma and its pricing practices. Thanks to some unwanted attention from lawmakers, presidential candidates and the public, the controversy raged through all of 2016—and Allergan, expecting the firestorm to continue under U.S. President-elect Trump, made moves to ensure it didn’t share that particular spotlight.

Since then, the Dublin drugmaker has urged its peers to do the same, and so far at least one has taken heed. In December, Danish diabetes specialist Novo Nordisk came through with its own promise to limit list-price hikes to single-digit percentages annually.

Meanwhile, other drugmakers seem to be keeping the 10% mark in mind, if on a less official level. Horizon, a specialty company that’s suffered payer retribution for its pricing moves, posted several 9.9% increases on arthritis med Duexis and recent gout pickup Krystexxa, to name a couple.

And Horizon isn’t alone. Of 3,734 products looked at by Wells Fargo analyst David Maris, 373 of those products took price increases of exactly 9.9% in 2016, he wrote to investors.

The way he sees it, it behooves drugmakers who don’t want to end up in the drug-pricing penalty box—à la Valeant, Turing or EpiPen-maker Mylan—to keep playing it safe in 2017.

“We believe the drug pricing debate is far from over,” he wrote, noting that the issue could still be “on the table” as one of Trump’s legislative priorities.


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