Brent Saunders talks drug price increases

STAT sat down with Allergan CEO Brent Saunders to talk about drug pricing. Saunders, who’s known to be a consumer of his company’s aesthetic enhancers, looked great — fit with a perfectly trimmed beard. He defended Allergan's recent price increases on some drugs. Does that fit with the "social contract" Allergan announced two years ago?

Yes, Saunders said — it fits both the letter of the contract, which promised to limit price increases to below 10 percent a year, and its spirit. The average gross price increase, he said, was 3.5 percent for Allergan's products. But he says the contract always referred to net prices — what Allergan pockets after rebates to health plans, PBMs, employers and the government are paid. That number was 0 percent. "So I think we absolutely lived up to well beyond the spirit and heart of our social contract, because our net prices are below the cost of inflation, which means economically, they’re in decline," Saunders said.

Saunders made a larger point: "The biopharmaceutical industry does not set the price the patient pays for his or her medicine. We should just put that on the table. The issue we face is we have a very complex and opaque system in the U.S. for how patients ultimately are charged for their medicines," he said. So is the problem that employers or plans are not passing drug rebate money back to patients? "To be honest, I’m not exactly sure where it all goes," he said.

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