Life after Shkreli: KaloBios promises affordable drugs, no 'price gouging'
- Biotech KaloBios Pharmaceuticals pledged to refrain from "predatory pricing" in a new commitment to reasonable pricing and transparency, as it works to rehabilitate its image following the arrest of one-time CEO Martin Shkreli and the company's subsequent bankruptcy filing.
- Promising to price drugs at overall cost plus a "reasonable" profit margin, the company said it would limit price increases to no more than the rate of inflation. Additionally, the factors making up the company's prices will now be shared publicly.
- KaloBios is attempting to acquire the rights to a tropical disease drug which it hopes could qualify the company for a coveted priority review voucher from the FDA. Vouchers can be sold by recipient companies, and have fetched hundreds of million dollars in sales to larger pharma companies.
This unusually public commitment from KaloBios appears aimed at pivoting away from the criticism it received under the leadership of former CEO Martin Shkreli. During his brief stint as CEO, Shkreli planned to acquire benznidazole, an aging treatment for Chagas disease, and drastically increase the price—a similar strategy to his infamous 5,000% increase for a toxoplasmosis drug as CEO of Turing Pharmaceuticals.
But Shkreli's arrest for securities fraud led to his ouster as CEO of both companies, and KaloBios was forced to file for bankruptcy. The company continued in its attempt to acquire rights to the drug however, and has reportedly lined up financing to do so.
As part of its new promise to reasonable pricing and transparency, KaloBios said it would price benznidazole at cost plus a "modest profit margin," if it is able to close a deal for the drug. Notably, the company does not plan to add in an R&D premium as it would not be conducting any original R&D.
Furthermore, KaloBios pledged to make benznidazole available at or near cost in developing countries, and guaranteed access to the drug for all patients.
All of this presumes KaloBios finalizes a deal to buy the rights and pushes the drug through regulatory review in the U.S. But it is a notable commitment as the broader pharmaceutical industry struggles to communicate the rationale behind high drug prices.
"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 new CEO Cameron Durrant. "We believe that our approach balances the needs of key stakeholders, including patients, clinicians, payers, NGOs, investors, policy makers and advocacy groups," he continued.
KaloBios' new pricing model would apply to any drug product it commercializes, not just benznidazole.
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