Former Schering-Plough CEO Says This is the 'Worst Solution' to the Drug Pricing Dilemma
August 25, 2017
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – As consumers and lawmakers debate questions of high prescription drug prices, one former pharma chief executive said the worst solution to the drug pricing issue is enacting legislation to curb high costs.
Fred Hassan, the former CEO of Schering-Plough and current managing director of private equity firm Warburg Pincus, told CNBC that self-control initiated be the industry is the best solution.
"The worst solution to all this is to let politicians and bureaucrats get involved with pricing because they really don't know the subject very well and it is a very complex subject," he told CNBC.
Over the course of the past few years, numerous politicians have railed against the consumer price of prescription drugs. Among those who have had the biggest voice include President Donald Trump and Sen. Bernie Sanders. Both populist leaders have called out companies for the prices charged to patients in the United States. Following his election, Trump told Time Magazine that he intended to bring down the price of prescription drugs. . Trump has called for the federal government supported prescription programs to negotiate drug prices. He said such a maneuver could save up to $300 billion, annually.
During his interview, Hassan said companies that exhibit “self-control and self-discipline” when it comes to pricing is the best measure for curbing runaway consumer costs. He also pointed to strong leadership positions, such as that taken by Allergan CEO Brent Saunders and his social contract for consumers. Last year, Saunders initiated the social contract and said the company will address price increases once per year and if an increase is necessary, Allergan will limit it to single-digit increases percentage wise.
“Our expectation is that the overall cost of our drugs, net of rebates and discounts, will not increase by more than low-to-mid single digits percentages per year, slightly above the current annual rate of inflation,” Saunders said at the time.
During his interview, Hassan pointed to drug price increases that have remained in the single digit percent wise as an example of that kind of control. He said those low-digit increases are due to the multiple millions of dollars a company spends to bring a drug to market. In his interview, Hassan said the best way to keep prices low is to “increase the supply of new drugs, which allows competition in the market to bring the price down,” CNBC said.
Hassan did say that some pricing problems occur when there are no generic equivalents due to drug exclusivity that has gone on too long. One example that can never be overused is that of Martin Shkreli, the former CEO of Turing Pharmaceuticals. In 2015, that company acquired the toxoplasmosis drug Daraprim and increased the price by 5,000 percent. Although it had been on the market for more than 60 years, there was no generic for the drug. During the Republican primary, Trump told reporters in South Carolina that he thought the 5,000 percent increase of Daraprim by Shkreli was disgusting and he expressed a negative opinion of Shkreli, calling him a “spoiled brat.”