Danish pharma and diabetes drug giant Novo Nordisk (NVO) is joining a nascent biopharma industry movement to voluntarily limit its hikes on prescription drug prices.
“We recognize that people with diabetes are finding it harder to pay for their healthcare, including the medicines we make,” wrote Novo’s U.S. President Jakob Riis in a statement on the company’s website. “As a company focused on improving the lives of people with diabetes, this is not acceptable.”
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Novo’s announcement may not be too surprising considering that its flagship insulin and diabetes franchise, which is the largest in the world by global sales, has come under intense pricing scrutiny in the U.S. Pharmacy benefits managers (PBMs) and insurers have balked at the firm’s insulin price increases, helping lead to a more than 40% drop in stock price over the course of 2016 despite a historically excellent record of shareholder return.
Riis admits as much in his statement. “We recognize that customers like PBMs and payers have to effectively manage their healthcare budgets, including anticipating and planning for price increases,” he wrote. “We want to be supportive of those efforts. One action we are taking today in support of that is to limit any potential future list price increases to no more than single-digit percentages annually.”
The single-digit topline price increase pledge (before further discounts and rebates are taken into account) is similar to promise by pharma giant Allergan (AGN), although that company’s price hike limits also incorporate discounts. Allergan CEO Brent Saunders laid out a “social contract” with patients in September and argued just last week that the drug industry must be proactive about limiting its prices before the government steps in to introduce more heavy handed caps.