The 'worst solution' to high drug prices is political interference, says former pharma CEO

  • Self-management and self-discipline are the keys to controlling exorbitant drug-pricing practices, former pharmaceutical executive Fred Hassan told CNBC on Thursday.
  • In the last year, most companies have stayed in the single-digit price increase range, he said, meaning things are more in control than they were a year ago.
  • "The worst solution to all this is to let politicians and bureaucrats get involved with pricing because they really don't know the subject very well and it is a very complex subject," he said.

Self-management and self-discipline are the keys to controlling exorbitant drug-pricing practices, veteran pharmaceutical executive Fred Hassan told CNBC on Thursday.

That, along with leadership like Allergan CEO Brent Saunders starting his social contract with patients, is the way to ensure prices remain low while maintaining the free-price environment that fosters innovation, he said in an interview on "Power Lunch."

In the last year, most companies have stayed in the single-digit price increase range, he said, meaning things are more in control than they were a year ago.

"Unfortunately, these newer drugs are expensive because innovation is still very expensive. It still costs about $2 million to $3 million on average to bring a new drug to market, and that is still about a million too high," the former Schering-Plough CEO said.

Hassan said the best way to solve the problem is to increase the supply of new drugs, which allows competition in the market to bring the price down.

About one-third of products don't have generics, he said, and "problems occur where a drug stays exclusive for too long."

"When that happens, I think society has every right to push back. ... [T]hat kind of pushback has occurred quite a bit in the past year, and I'm glad to see that pushback occur," said Hassan, who is currently managing director at private equity firm Warburg Pincus.

Despite talk from President Donald Trump on the campaign trail about reducing pricing and several mentions of potential policies, such as allowing consumers to import drugs from other countries with lower prices, the administration has not yet taken concrete steps to address the industry practice.

Hassan prefers it that way.

"The worst solution to all this is to let politicians and bureaucrats get involved with pricing because they really don't know the subject very well and it is a very complex subject," he said.