Allergan CEO pledges to keep price hikes reasonable

Allergan CEO Brent Saunders penned a blog post on the company’s website to send a message to customers and investors that he opposes steep price hikes on life-saving drugs.

In what he dubbed Allergan’s “social contract with patients,” Saunders promised to keep price hikes on branded medications to an acceptable level and to balance the profit motive with legitimate investments in R&D that could yield life-saving drugs.

While not naming Valeant and Mylan, which have been in the news recently for huge price hikes, Saunders wrote, “I understand the public outcry and add my voice to the condemnation of these (price-gouging) behaviors.”

The Allergan chief also promised to keep price increases on branded medications below 10% and to limit price increases to once a year, after discounts and coupons are taken into account. In addition, he pledged the firm will provide an “aggregate” explanation of how its price increases affect medical spending and the industry at large at least once each year.

Interestingly, Saunders also said that Allergan would not increase the price of branded drugs whose patents are on the cusp of expiring without corresponding increases in the production price, which is a common tactic among big pharma companies.

"Allergan is committed to being a good citizen in self-policing and being disciplined about price increases," he wrote. "And I hope others in the industry follow."