By Ransdell Pierson
(Reuters) - The chief executive officer of Allergan Plc (N:AGN) said his company will limit annual price increases on its prescription drugs, and that "outlier" drugmakers that have imposed huge price increases on their products are scaring off venture capital investors.
CEO Brent Saunders, in an interview on Tuesday, did not mention names of companies but said several that have come under fire for "egregious" price increases are hurting the industry.
"My biggest fear, every time there's another headline or more regulator negativity, is that venture capital needed for innovation could move out of the sector," Saunders said, adding that the amount of venture capital backing for early-stage drugmakers is slowing.
"If the bottom of the ecosystem, which is so important for early drug discovery, begins to evaporate, innovation will start to go away," he said. "It has started."
Hillary Clinton, the Democratic presidential candidate, on Friday cited Turing Pharmaceuticals LLC's 5,000-percent price increase for AIDS drug Daraprim and Mylan NV’s (O:MYL) repeated steep price increases on its EpiPen device for severe allergy sufferers as “troubling” examples of price hikes that have attracted bipartisan congressional scrutiny.
Valeant Pharmaceuticals International Inc (TO:VRX) has also drawn criticism, for hefty increases on two heart drugs and other medicines.
Saunders, in a blog earlier on Tuesday, said Allergan plans to raise prices no more than once a year and keep price hikes to no more than low-to-mid single digit percentages, slightly above the current annual rate of inflation
Allergan's biggest products are Botox, used to treat wrinkles and medical conditions such as migraine headaches, and Restasis to treat dry eye. Although a significant portion of Botox sales are for uninsured cosmetic conditions that patients pay out of pocket, Saunders said Allergan would limit price increases for all uses of the brand.
Allergan shares rose 1.7 percent to $240.01 on the New York Stock Exchange, amid a 0.64 percent advance for the Arca Pharmaceutical Index (DRG) of large U.S. and European drugmakers.
Clinton on Friday said she, if elected president, would create an oversight panel to protect U.S. consumers from large price hikes on long available innovative drugs, a proposal that Saunders described as "impractical"
"I'd like to stop outliers too, but implementing that would be hard to do," he said. "In a free market, who says what would fall under the panel's purview, and what the price should be?"
