Allergan took its pricing pledge last fall about as literally as it gets
Allergan PLC took its pledge last fall to limit drug price increases about as literally as it gets, according to a new analysis from Evercore ISI analyst Umer Raffat.
The company has “technically” limited its hikes with “almost all the price increases” coming in at under 10%, as promised, Raffat said.
But many of the company’s price increases came in just below that benchmark, at 9.5%, on the pricey glaucoma drug Lumigan, dementia caused by Alzheimer’s disease drug Namenda XR, intestine ulcer drug Carafate, irritable bowel syndrome drug Linzess, depression drug Fetzima and intrauterine device Liletta.
The lowest price increase on an analysis done by Raffat was a 5% increase on the antibiotic Teflaro.
“These price increases are consistent with our #socialcontract,” Allergan said on Twitter, responding to criticism.
The company said, consistent with its pledge, price increases for 2017 remained in the single digits, and said net price increases — which include negotiated discounts and rebates — from the prior year were expected to be about 2% to 3%.
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Chief Executive Officer Brent Saunders said in September that Allergan expected that number would “not increase by more than low-to-mid single digit percentages per year, slightly above the current annual rate of inflation.”
Saunders had also said that the company would not make big price increases as patents on drugs were about to expire, a common industry practice.
Allergan did not do that for 2017, Raffat said.
Allergan shares dropped 9.8% over the last three months, compared with a 3.6% rise in the S&P 500 SPX, +1.08%