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How a drug company fighting depression and schizophrenia avoids 'ripoff' drug prices

Key Points
  • Lundbeck's CEO Kare Schultz said he's not concerned about the president's tweet on "ripoff prices" aimed at the CEO of Merck.
  • Schultz said generics keep Lundbeck's drugs cheap for patients, while innovative therapies create higher-value products.
Lundbeck and 23andMe team up for depression study

President Donald Trump attacked a pharmaceutical chief executive over "ripoff drug prices" on Monday, but Lundbeck CEO Kare Schultz doesn't anticipate a similar fate for his own company.

Lundbeck, which funds research and development for drugs that combat depression, schizophrenia and other mental illnesses, strikes a balance between high-value products and generic alternatives that shields the company from such criticisms, Schultz said Monday on CNBC's "Closing Bell."

"It does cost billions of dollars to make a new drug, but of course there's also patent expiry and then drugs become very cheap," Schultz said. "And that's the case with, for instance, antidepressants, where the generics are more than 90 percent of the market."

"So we have very cheap therapies, but also new innovative therapies, which will be higher value but also higher cost per patient," he said.

A pharmacy technician fills a prescription inside a Wal-Mart store in Trevose, Pa.
Mike Mergen | Bloomberg | Getty Images

Lundbeck stock fell 1.05 percent on Monday. Sixty-one percent of Lundbeck's sales came from North America in the first half of 2017.

Earlier Monday, Trump lashed out at Merck CEO Kenneth Frazier for stepping down from the American Manufacturing Council over the president's equivocal response to a white nationalist protest that turned deadly in Charlottesville, Virginia, on Saturday.

"Now that Ken Frazier of Merck Pharma has resigned from President's Manufacturing Council," the president tweeted, "he will have more time to LOWER RIPOFF DRUG PRICES!"

"As CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism," Frazier, who is African-American, said in a statement tweeted Monday morning.

Asked if he was concerned about the president's willingness to take aim at pharmaceutical companies, Schultz said Lundbeck has nothing to worry about.

"We always feel we provide value in all the products we've been bringing to the market, so we don't think we have ever seen, from our company, ripoff prices," Schultz said.

"I know there have been episodes with other, smaller companies in the United States, which is very regrettable," he said. "But in our case, we believe we bring true value to the patients."