That's what Valeant Pharmaceuticals (NYSE:BHC) has been accused of -- and not just by anybody. Those words were leveled at the drugmaker by Hillary Clinton, who could very well become the next leader of the free world. But is it possible that Valeant could now be considered a drug-pricing role model -- one for other pharmaceutical companies to emulate?
Turning over a new leaf
Valeant's Patient Access and Pricing Committee recently announced price increases for several of its drugs. Here we go again, right? Not really.
These price increases will range between 2% and 9%. Valeant's new policy is that the average annual price increase percentage for its products will be at most in the single digits. The company also says that any price bump will be less than the five-year weighted average of increases across the branded biopharmaceutical industry. Valeant also reported that its price changes in 2016 for branded drugs average less than 2%, roughly in line with overall inflation in the U.S. (using the 2016 Consumer Price Index).
That's not all. The net prices of Valeant's dermatology and ophthalmology products have actually decreased by more than 10% on average this year. This percentage decline factors in the impact of rebates and other adjustments. The company has committed to leave prices for these products unchanged for the rest of 2016.
Many companies across nearly every industry routinely increase their pricing from time to time. Valeant has publicly committed to keep any price increases low and below biopharma industry averages. What's not to like about the company's new approach?
Too little, too late?
As admirable as Valeant's new policies might be, for many, these changes are coming way too late. Plus, the company's track record puts anything Valeant does now in a different light.
Take Syprine, for example. Valeant bought the drug, which treats patients with a rare liver disorder known as Wilson's disease, back in 2010. Since then, the company has increased the price of Syprine by a staggering 3,000%.
And it wasn't just one Valeant drug for which prices skyrocketed. According to Richard Evans, analyst with Sector and Sovereign Research, the company increased net prices for its U.S. product lineup by more than 41% in the 12 months following October 2014.
Valeant has good (or maybe the better word to use is bad) company here. Mylan Pharmaceuticals (NASDAQ:MYL) upped the price of its EpiPen by almost 500% over the last 10 years. The company felt the wrath of many patients with allergies who must have an EpiPen handy at all times in case they experience anaphylactic shock.
Mylan responded to the outcry by launching a generic version of its EpiPen at around half the cost of the branded product. The company also decreased out-of-pocket costs for some patients. However, Mylan didn't commit to wholesale pricing policy changes like Valeant did.
One could argue that Valeant and Mylan simply did what businesses are supposed to do: make money for their shareholders. However, the opposing argument is that even putting questions of moral rights and wrongs aside, making more money in ways that damage the company over the long run isn't good for shareholders. I subscribe to the latter viewpoint.
I do think, though, that Valeant is now headed in the right direction. The company has a new CEO and a new pricing policy. No, the changes won't keep politicians from continuing their attacks. But they should help Valeant present itself in a different light looking forward.
That's important for the company's shareholders, who have felt the pain of a 90% drop in the stock's value. Can Valeant make a comeback? Maybe so. Is the company now a role model for others for drug pricing policies? As crazy as it might sound in light of Valeant's history, the answer could be the same: maybe so.