Valeant avoids double-digit price hikes with 9.9 percent increases

In response to intensified criticism of drug prices, Allergan CEO Brent Saunders promised not raise prices by more than one percentage point a digit. So far, no other head of a large drug maker has spoken publicly about this notion or agreed to do the same.

However, some companies may adopt this approach in silence – and push the envelope in the process


How is that? One way is to increase drug prices by 9.9 percent. And this is what Valeant Pharmaceuticals made last week.

The article continues after the announcement

The drugmaker, which has been widely reviled for the purchase of older drugs and then raise prices to very high levels, increasing list prices three eye medicines exactly 9.9 percent, according to Wells Fargo analyst David Maris.

Of course, an increase of that price pales compared to 525 percent and 212 percent increase Valeant acquired a pair of rescue heart medicines on the same day the company acquired drugs in early 2015. However, given public anger over the rising costs of prescription drugs, this type of maneuver is a convenient way to avoid the unpleasant scrutiny and income still goose.

The “increased 9.9 percent against a 10 percent still seems very strange and may be an attempt to stay under the radar of health plans and establishes looking out for increase prices double digits, “Maris wrote in an investor note.

note of the three ocular drugs represented only $ 1.2 million in combined sales in the second quarter, which is a small piece of $ 2.4 billion in sales across the company was taken. But the company is under pressure to launch income, which suggests you can expect more price rises 9.9. “While insignificant,” said Maris, “we believe that this may be a sign of things to come.”

We asked why the company chose to raise prices by 9.9 percent and not 10 percent, but did not receive a response.

The threshold of 10 percent has taken more than symbolic weight, however.

A bipartisan group of lawmakers in Congress last week presented a bill that would require drug makers to justify their pricing and provide a breakdown of its costs before raising prices of products in more than 10 percent. The law largely mimics the bills that have been introduced in more than a dozen states, but only Vermont has approved such a law .

For some, legislation may in fact actually be interpreted as an invitation to raise prices, but keeping them below the threshold of 10 percent in order to avoid government bureaucracy. If this becomes a regular practice remains to be seen.

The price rises come as Joe Pope, the new CEO of Valeant, attempts to reform the company following scandals pricing and accounting. In the sequel, Pope has pledged to end the dependence of the enormous price increases.

Valeant also pledged in April to discounts provide hospitals for heart medications, although these discounts have not yet materialized, according to a recent survey of nearly two dozen hospital systems and medical centers surveyed by Bloomberg News .

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