Executive order on drug pricing could have positive outcome: Allergan CEO

  • President Donald Trump is ready to issue an executive order aimed at lowering drug prices, Bloomberg reported, citing people familiar with the matter.
  • A move toward value-based agreements is reportedly under discussion, which Allergan CEO Brent Saunders thinks will have a "constructive" outcome for the industry and patients.
  • Allergan is the best-positioned biopharmaceutical company to deal with a tougher or different pricing environment, Saunders said.

Allergan CEO Brent Saunders believes an executive order on drug pricing could have a positive impact and he believes his company is well-positioned to handle any changes.

The Trump administration is preparing that executive order, which could be signed within weeks, Bloomberg reported Thursday, citing people close to the matter. The White House had no comment on the report.

One policy that may be included is a move toward more value-based agreements, according to Bloomberg.

"That is a good, positive, constructive outcome for the industry and for patients," Saunders said in an interview with CNBC's "Power Lunch" on Thursday.

Another thing being discussed in the industry as a possibility is more transparency around the rebates the industry pays and perhaps even applying those rebates directly to lowering drug prices instead of premiums, he added.

"Having them more directly lower the cost of drugs, I think, is a good thing and ultimately will lead to a more clear and transparent system for drugs because it is pretty complex today."

Allergan has already committed to being responsible when it comes to drug pricing, releasing a social contract with patients in September.

Because of that, Saunders believes Allergan is the best-positioned biopharmaceutical company to deal with a tougher or different pricing environment.

"We have great diversity. We already price our medicines I think very fairly. We don't take big prices increases," he said.

The question is what the rest of the industry will do.

"We have seen companies start to be, I think, a lot more responsible and a lot more focused on finding the right equilibrium between pricing and access and the ability to invest in innovation to procure the treatments of new diseases," he said. "Where people set that equilibrium is a little different."

News of the report sent drug stocks lower Thursday.

— CNBC's Eamon Javers and Fred Imbert contributed to this report.