Alnylam CEO backs inflation-based price hikes, welcomes Amazon | CNBC

As Alnylam Pharmaceuticals nears approval of its first drug, the fledgling drug-maker is planning to transition out of research and development into the commercial stage.

That means figuring out a pricing strategy, and CEO John Maraganore said he supports the idea of pegging increases in drug prices to the rate of inflation.

“It’s hard to justify drug price increases,” Maraganore said on CNBC’s “Power Lunch.” If you price a drug appropriately, where it ought to be priced, whats the rationale of increasing the price every year?”

“It’s hard for our industry to defend that, overall,” he added.

That breaks down to a price increase of approximately 2 to 3 percent yearly, which pales in comparison to increases industry-wide. Drug costs have skyrocketed in recent years, with some prices surging more than 1,000 percent per year.

Companies argue profits from inflated drug pricing help them grow and fund more drug development. Alnylam hopes to take almost the opposite approach, growing through innovation.

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Alnylam CEO backs inflation-based price hikes, welcomes Amazon.