Valeant ($VRX) and fellow Canadian pharma Concordia Healthcare share a similar appetite for M&A. Another thing the two companies have in common? A zest for dramatic drug price increases on older meds.
A couple years ago, Concordia said it would shell out $265 million for Donnatal, a decades-old drug that treats irritable bowel syndrome. In June 2014, Concordia jacked up Donnatal’s price to $602 from $353 per prescription, according to IMS Health data cited by Forbes. The drug, which is the company’s best-selling product, now sells for about $782 per-- an 800% increase from 2010.
Unsurprisingly, Concordia is defending its price-setting ways. The company doubled Donnatal’s price after it snatched up the med in 2014. At the beginning of 2015, it jacked up the price of the drug another 11%, Concordia told Forbes. It's unclear whether the company pushed through another increase in between those dates, or later in 2015.
It is clear that the company still relies heavily on price increases. Concordia recently said that its U.S. business, which makes up about 40% of its sales, would post low single-digit growth “based on approximately equal parts pricing and volume growth.” And the company is forecasting mid-teen growth from its international business, thanks to “new product launches and pricing opportunities,” it said.
Donnatal isn't the only drug Concordia has targeted for price increases soon after its acquisition. Last year, the company bought Amdipharm Mercury (AMCo) from European private equity firm Cinven for $3.5 billion to flesh out its generic drugs portfolio.
Sixteen of the drugs that Concordia picked up in that deal have charted price increases since September 2015, the month it announced the acquisition. The biggest price increase was for AMCo’s drug that prevents blood clotting, Forbes reports. That drug’s price shot up 119% to $760 between September 2015 and April 2016; Concordia closed the buyout in October.
Concordia’s pricing moves reflect those of Valeant, who has employed a similar buy-to-grow strategy--albeit with severe repercussions. The Laval, Quebec-based drugmaker has come under fire for buying cardio meds Isuprel and Nitropress and jacking up their prices by 525% and 212%, respectively.
Now, after a disastrous fallout that led to the departure of its CEO, Valeant is trying to clean up its act. The company under the new leadership of Joe Papa said that it would launch an internal committee to oversee its pricing decisions and prevent history from repeating itself.
“Valeant has made mistakes in how it priced its drugs in the past, and we are committed to ensuring those mistakes are not repeated,” Papa said in a statement earlier this month. “This new committee will take a disciplined approach to reviewing the company’s pricing of drugs, and will consider the impact on patients, doctors and our health care industry partners.”
- read the Forbes story
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