Pharma pricing back in spotlight

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Back in January 2017, a number of Big Pharma companies pledged to keep further drug price increases under 10% a year. This was the result of years of pressure from politicians (see Bernie Sanders tweets), patients and doctors.

AbbVie makes a faux pas

Just nine months later, in September, an analyst from Leerink, after meeting with company Management, suggested that AbbVie may be able to break that pledge, and raise prices more than 10% after 2018. However, this met with such heavy criticism that the company has since backtracked, saying that the analyst had “incorrectly characterised” Management comments and that of course AbbVie would stand by the pledge.

Still toxic

This case comes as a timely reminder of the sensitivity of drug pricing in the US. With the Graham-Cassidy bill (the bill to repeal Obamacare) now dead in the Senate, many market observers had thought that the pricing risks to Big Pharma would fade away. That does not seem to be the case, as we see that public opinion and the media can still sway pricing decisions.

Pfizer the smart ones?

There were some pharma companies, such as Pfizer, that never made the pledge to keep price increases under 10%, arguing that it is a mistake to set an arbitrary level for a price cap in a market-based system. Given what happened to AbbVie this week, they must be high-fiving that decision.

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