A little over two years ago, my wife’s employer informed her that, if I was able to get health insurance through my employer, I would have to do so. We had always kept the family on one health insurance policy, as this seemed easier for managing prescriptions, and so on, but now she and the kids are on one plan and I on another. We didn’t think much about the change until my wife went to pick up a prescription for me in January 2016. On her plan, the medication I had been taking for at least 10 years was a $20 copay. But when she went to pay for the medicine on my new plan, she was informed the copay would be a little under $900 — for a generic drug. Not surprisingly, that medication was left at the pharmacy counter, because with two kids in college, a 4,400 percent increase (i.e., $240/year to $10,800/year) wouldn’t be easily absorbed in the family budget. But don’t worry; we worked with my doctor to find a suitable and affordable replacement.
Of course, my family is not alone in such healthcare/drug price increases. A few months prior to my experience, patients — and, it seems, society in general — expressed outrage when Martin Shkreli implemented his 5,000 percent increase of Daraprim. The public’s clamor continued as Heather Bresch, the CEO of Mylan, jacked up the price of her company’s popular EpiPen by 400 percent. Suddenly high drug prices and “evil” pharmaceutical companies became synonymous, which created enticing political fodder for presidential candidates Hillary Clinton and Donald Trump. And while many biopharmaceutical CEOs publically chastised such drug-price-increase behavior, one CEO took a very different approach.
On September 6, 2016, Brent Saunders, chairman, president, and CEO of Allergan, published his CEO Blog “Our Social Contract with Patients” — a set of drug pricing rules for Allergan to live by. In the blog, Saunders notes how “the healthcare industry has had a long-standing unwritten social contract with patients, physicians, policy makers, and the public at large.” It is understood that making new medicines requires significant investment, and companies taking on such risk have to price medicines so they are accessible to patients, while also providing sufficient profit to encourage future investment. “It was designed to be a win-win-win,” he wrote.
The concept of a social contract is not new; social contract theory is an old philosophy establishing moral and political rules for how rational people in a society should live together. So why did Saunders’ idea seem so different, and why did it garner an enormous amount of attention? Perhaps it was because of his willingness to put pen to paper — to make the unwritten, written. For while social contracts can be implicit (e.g., raising one’s hand in class to speak), ones that are explicit (e.g., the U.S. Constitution spelling out unalienable rights of life, liberty, and the pursuit of happiness) tend to carry much more weight. I applaud Saunders’ approach toward self-regulation. But more importantly, I applaud his willingness to transparently share the story behind the story with you — our readers (see page 16). For as interesting as it was to see a biopharma CEO take the path less traveled when it came to tackling drugprice increases, it is even more compelling to learn the process and speed in which he and Allergan were able to move their social contract from concept to publication.