The president of Novo Nordisk Inc. says the company will limit future list-price increases for its medicines to no more than single-digit percentages annually. The move follows a similar pledge made by Allergan back in September.

In a statement on the company’s website, Novo Nordisk president Jakob Riis labeled the move a “position on affordability” and outlined three tenets: creating more pricing predictability, transforming the drug pricing system, and reducing the burden of out-of-pocket costs to patients.

Regarding pricing predictability, Riis said the company was taking the step so that customers and payers can effectively anticipate and budget for price increases. 

“News reports on drug prices have left the public with an impression that companies like ours realize all the profits from the ‘list price’ increases we’ve made over the last decade,” Riis said, terming such a notion “misleading” even though, as a manufacturer, the company sets the list price.

“However, after we set the list price, we negotiate with the companies that actually pay for the medicines, which we call payers,” Riis said in the statement, adding that it is a necessary in order for Novo Nordisk medicines drugs to remain on preferred drug lists. “The price or profit we receive after rebates, fees and other price concessions we provide to the payer is the “net price.” The net price more closely reflects our actual profits.”

Pointing to rebates, discounts and price concessions sought by pharmacy benefit managers and payers., he said the company was losing considerable revenue that otherwise would go to R&D, sales and marketing, education, disease awareness activities and medical information support. 

“So, we would continue to increase the list in an attempt to offset the increased rebates, discounts and price concessions to maintain a profitable and sustainable business,” he said. “While we can debate who pays what in different scenarios, it doesn’t change the fact that many patients simply can’t afford the medicine they need.”

Riis called for a partnership approach involving pharmacy benefit managers, insurance companies, employers, patient organizations and policy makers to help find sustainable solutions. 

“As a leader in diabetes care, we recognize patients need more,” he said in the website statement, promising that the company plans to have further discussions on the subject in coming months.

(Source: Novo Nordisk Inc.)