Pharma's pricing pledges? Maybe they weren't such a good idea in the first place, experts say

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Experts Tuesday discussed pharma's pricing pledges at the FierceBiotech's second annual Drug Development Forum in Boston.

BOSTON—Amid reports this week that AbbVie considered doubling back on this year’s price-cap pledge for 2018, some industry watchers wondered aloud why companies would ever make such a pledge in the first place.

“I don’t see why anybody would give pledges because pledges are meant to be broken, and that just creates ill will,” Ken Kaitin, director of the Tufts Center for the Study of Drug Development, said Tuesday during a panel at FierceBiotech’s second annual Drug Development Forum in Boston. “To me, start off and do the right thing, and then you don’t have to worry about a pledge later on.”

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Kaitin’s comments came just one day after reports that AbbVie—one in a handful of companies that pledged to limit its annual price increases, following the lead of Allergan’s Brent Saunders—had considered doing away with its 10% ceiling for next year. That same day, facing heavy criticism, the Illinois company maintained that it would stick to its limit and issued a statement saying the reports--based on a note from Leerink analysts who had met with AbbVie management—had "incorrectly characterized" its executives' statements.

Still, analysts have predicted that companies would do away with the vows as soon as the public fury surrounding drug pricing died down—and Pfizer, for one, is glad it never made one in the first place.

“We thought, if you believe in a market-based system, arbitrarily the setting of a cap like that is not consistent with that belief,” Bryon Wornson, Pfizer Oncology’s of VP of global health and value, said during the same panel. Instead, the company—which Wornson said has kept its net price increases at about 4% so far this year—said it would act responsibly, and “we’ve tried to walk the talk and do that,” he added.

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The way Kaitin sees it, though, a lack of public pledges wouldn’t mean that a so-called “social contract”—a term Saunders popularized last year with his pricing promise—between drugmakers and patients isn’t already in place.

“Twenty percent of sales revenue from the pharma industry goes back into R&D, and I would challenge anyone to find another R&D-based industry that goes 5% to 10% at most. And yet most people don’t see that,” he said. “... The argument needs to be made that, ‘this is us fulfilling our contract’ ... that message is just not getting across.”