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Novo Nordisk becomes second pharma company to cap price hikes Posted 17/02/2017

Danish pharmaceutical company Novo Nordisk has pledged to limit the price rises of their drugs to single digit increases each year, following the commitment made by Allergan in September 2016.

The problem of rising drug prices has been well reported, and perhaps one of the less controversial issues raised by newly inaugurated President Trump. Amid rising controversy, in September 2016 US-based Allergan Inc became the first pharmaceutical company to outline a fair pricing policy, including limiting their annual price rises to single-digit increases.

Three months later, Danish pharma company Novo Nordisk followed suit, also committing to limiting yearly price hikes to single digits. Novo Nordisk produces insulin, an essential drug for which price increases have come under particular criticism. Price rises for this essential medicine have been significant, so much so that some people in the US are reportedly spending as much on their diabetes expenses as their mortgage payments. This even prompted US politician Bernie Sanders to request an investigation of Novo, as well as Eli Lilly and Sanofi, for possible price collusion.

This announcement, which was made at the end of November 2016, should ease the pressure on Novo Nordisk. As well as restricting price increases, the company also committed to maintaining patient assistance programmes (including investing in co-pay programmes to reduce out-of-pocket costs for patients) and making less expensive forms of insulin available. They also aim to simplify the complex pricing system in the US, which involves myriad factors including rebates, discounts, administrative fees, co-pays and deductibles and has created confusion about what people pay for their medicines.

To achieve these goals Novo says they will collaborate with key stakeholders, including other pharmaceutical companies, pharmacy benefit managers, insurance companies and patient organizations. They also say they will take part in policy discussions to tackle drug prices and improve the options for people living with diabetes.

Speaking about the motivation for making this change, the company’s North American President Jacob Riis said many patients simply could not afford the medicines they need. Riis also discussed the gap between the list price set by Novo Nordisk and the net price they receive following rebates paid out to insurers and pharmacy benefit managers. Explaining previous price increases, he said that increases in rebates, discounts and price concessions had led to a loss in revenue for Novo, and highlighted the need for a ‘partnership approach’ to find sustainable solutions.

Soon after the announcement, the move was publicly commended by Allergan’s CEO Brent Saunders. With continuing controversy over drug prices, it seems likely that other drug companies will follow this self-regulated pricing template.

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Source: Novo Nordisk

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