The pharmaceutical industry is feeling pressure from consumers and regulators to justify high drug costs. Here in New York, for example, two early budget proposals would have launched State review of large price increases and instituted price ceilings within the Medicaid program (see HCFANY’s comments on those proposals here). Now KaloBios Pharmaceuticals has released a pricing policy that promises the company will only seek reasonable profits and, most importantly, adopt a transparent price-setting process.

KaloBios was led by Martin Shkreli, who sparked public outrage and Congressional hearings by raising the price of Daraprim by 5,000 percent. There are many complicated reasons why prescription drug prices are increasing. Many of them are legitimate market issues that will require creativity and thoughtfulness to fix. But sometimes drug prices are unaffordable because of price-gouging, something that KaloBios addresses frankly in their new policy. Transparency about the actual costs of producing and selling medications could go a long way towards preventing future Martin Shkreli-style abuses, and allow more productive public discussion about drug prices.

If the company follows through on its promises, it could set an important precedent for other pharmaceutical companies. The fact that the company produced the policy at all shows that consumer voices matter. No law or regulation forced the company to do so – just pressure from the public to treat consumers fairly.