A company drawn into the price gouging scandal has promised to adhere to an affordable and transparent pricing policy for its drugs in future.
KaloBios became embroiled in the furore surrounding the pricing antics of Martin Shkreli last year – subsequently firing him as CEO as a first step on the path to restoring its reputation.
The move did not do much to stem the backlash, however, with several senior executives jumping ship as the company suffered the indignity of being de-listed from the NASDAQ and filing for bankruptcy protection.
Now, the company says it will only price its medicines at a level that will allow a “reasonable return” on its investment.
The new pricing model “will guide the company’s strategy and operations”, according to new CEO Cameron Durrant, who has pledged to price its Chagas disease treatment benznidazole on the basis of “cost plus a modest profit margin”.
“We are not conducting original research on benznidazole and therefore do not plan to incorporate an ‘R&D premium’ into the price,” he asserted.
That runs counter to comments made by Shkreli when he was CEO of Turing Pharma, arguing that the massive price hike for Daraprim (pyrimethamine), a drug used to treat the parasitic infection toxoplasmosis was justified as the money would be used to research new drugs for the disease.
In the US benznidazole would be made available regardless of their ability to pay, while the drug will be sold overseas at or near cost, according to KaloBios. At the time Shkreli’s investment fund took a stake in KaloBios and he was appointed CEO, the company had suggested it expected to price the drug “similar to hepatitis C antivirals” which can costs tens of thousands of dollars per year.
Durrant said the company will publicly share the reasoning behind its pricing and will seek input from “key stakeholders” on what would constitute a reasonable return.
The company is currently working with Savant Neglected Diseases to develop a version of benznidazole that can be filed for approval as a Chagas disease treatment with the FDA.
While the drug is approved to treat Chagas in some markets outside the US, there is a worldwide shortage due to manufacturing constraints.
“Our new pricing model is a commitment to define and develop transparent, responsible pricing for the products we hope to bring to patients in the future,” said Durrant.
“Drug pricing is a big concern for all stakeholders in healthcare. We believe that our approach balances the needs of key stakeholders, including patients, clinicians, payers, NGOs, investors, policy makers and advocacy groups.”