CEO of Turing Pharmaceuticals, a Hedge Fund manager, raised overnight the pricing for his company’s drug by 5550%. You saw the outrage in the media. You likely read my note on the lack of method to this madness. One requirement I have always recommended for price increases is giving customers reasons to justify the price increase. In Ask the Expert series in this blog William Poundstone wrote about justifying price increases with cost reasons.
Nothing can make this need for justification more stark than the four point proposal put forth by Hillary Clinton in her response to Turing’s price increase.
Requiring drug companies to justify price increases
Why leave this simple common sense rule of pricing become a regulation? Always follow the rule. Pricing may be driven by value and need for profit maximization but pricing communication is driven by whole lot of factors, none of which is profit.