Senators Thrash Pharma CEOs for Pricing Drugs Higher in the U.S.

Senators pummeled the CEOs of three of the largest pharmaceutical companies with demands that they explain why one in four Americans can’t afford their prescription drugs, prices of which are higher in the U.S. compared with other wealthy nations.

“How many die as a result of that? How many suffer unnecessarily? Nobody knows. But my guess, it is in the millions,” said Sen. Bernie Sanders (I-Vt.), chair of the Senate Health, Education, Labor, and Pensions Committee, which on Thursday held its second hearing on the topic of high drug costs.

Facing the lawmakers were Johnson & Johnson CEO Joaquin Duato, MBA, and Merck CEO Robert Davis, JD — who had refused to appear before the committee until Sanders threatened in January to subpoena them — and recently named Bristol Myers Squibb CEO Christopher Boerner, PhD, who had volunteered to appear.

Sanders gave examples of the companies’ “outrageous” prices, noting that Bristol Myers Squibb’s anticoagulant apixaban (Eliquis) costs $7,100 a year in the U.S., but just $900 in Canada and $650 in France; Johnson & Johnson’s arthritis drug ustekinumab (Stelara) costs $79,000 in the U.S. but $20,000 in Canada and $12,000 in France, and Merck’s cancer drug pembrolizumab (Keytruda) costs $191,000 in the U.S. but $112,000 in Canada and $91,000 in France. The bulk of the companies’ international profits are coming from U.S. sales, Sanders said.

Furthermore, the drug prices have been increasing much faster than inflation, he added.

The companies’ executives would say “it’s not their fault, and that the PBMs [pharmacy benefit managers] are forcing Americans to pay much higher prices,” Sanders said. And they’d point to the high cost to develop new drugs, “and how often the research they undertake for new cures is not successful. They’re right.”

But, Sanders continued, “let’s be clear. The overwhelming beneficiary of these high drug prices is the pharmaceutical industry.”

He pointed out that Bristol Myers Squibb spent $3.2 billion more on stock buybacks and dividends in 2022 than it spent on research and development, while Johnson & Johnson spent $46 billion more on stock buybacks and dividends than it spent on research and development since 2012. “In other words, these companies are spending more to enrich their own stockholders and CEOs than they are in finding new cures and new treatments,” he noted.

How Do They Get Away With That?

High CEO compensation was also in Sanders’ crosshairs during the more than 3-hour discussion.

In 2022, Johnson & Johnson’s CEO received $27 million; Merck’s CEO was paid $52 million, and Bristol Myers Squibb’s CEO took home $41 million, he said.

“The United States government does not regulate drug companies, with very few exceptions,” he said. “The drug companies regulate the United States government … in a corrupt political system” in which their well-paid lobbyists — 1,800 last year in D.C. — “make sure Congress did their bidding.”

For the past 25 years, the entire pharmaceutical industry spent over $8.5 billion on lobbying and more than $745 million on campaign contributions, Sanders said. “If you want to know why you’re paying the highest prices in the world, America, that’s why.”

The CEOs generally defended their pricing policies, blamed external forces such as insurance companies and pharmacy benefit managers, touted their coupon and patient assistance programs, and stressed the high cost of drug development.

Duato said the average cost to bring a drug through clinical trials is more than $2 billion.

Boerner noted his company’s drugs transformed HIV/AIDS “from a death sentence into a chronic condition.” Moreover, its immunotherapy drugs nivolumab (Opdivo) and ipilimumab (Yervoy) “harnessed the body’s immune system to fight cancer” and “changed the median life expectancy from less than 9 months to over 6 years.”

In 5 years, said Davis, Merck has helped nearly 800,000 patients get their products for free, “an estimated value of $7.8 billion.”

He blamed “underlying systemic and structural issues,” as well as “vertically consolidated players … whose negotiating strength has increased dramatically,” and growing gaps between list and net prices.

Comments like that prompted Sen. Tammy Baldwin (D-Wis.) to speak up when her turn came, saying that it’s hard to follow the money flow.

She touted a bill she is sponsoring with Sen. Mike Braun (R-Ind.) that would require pharma disclosures for certain spending, such as for research and development, executive pay, advertising, and stock buybacks, whenever a pharmaceutical company wanted to raise the price of a drug by a certain amount.

Baldwin recalled a conversation with former HHS Secretary Alex Azar, JD, former president of Eli Lilly, with whom she had shared a letter from a constituent with two sons who had diabetes and couldn’t afford the medication they needed.

“What do I tell this dad?” she asked him. “Azar responded, ‘it’s complicated,'” she said. “I can’t tell my constituents that we can’t address this because it’s complicated.”

When she tried to get experts to “follow the money, nobody could,” she added.

Not all of the committee members saw fault with the pharma companies’ positions.

And one, ranking member Sen. Bill Cassidy, MD, (R-La.) called the entire hearing a “show trial” that was “unserious and cynical.”

“Everybody on this panel cares about the high cost of prescription drugs and wants to work on real solutions,” Cassidy said. But “this hearing is not about finding legislative solutions,” in part because the committee rejected the offer to invite top executives with subject matter expertise. Instead, the committee decided to “publicly attack private citizens for being successful under capitalism … and demand these CEOs come before the committee for a public, verbal stoning.”

Cassidy said the problem is far greater and more complex than individual companies.

However, most of the senators who spoke during the hearing wanted more answers from these executives, and a better understanding of how drugs’ price points change from research lab to the patient.

Patent Gimmicks

Sen. Maggie Hassan (D-N.H.) noted her concern about how pharma companies maintain exclusive rights to sell their drugs after they should expire.

Pharmaceutical companies “are doing everything they can to keep their prices and their profits sky high,” she said. One way they do that is by filing “hundreds of frivolous patents that lock in their exclusive right to sell their drugs for decades. By playing games like this with the patent system, companies block low-cost alternatives, like generics, from coming to market.”

She pointed out that pembrolizumab has 168 patents, many of which are “patent gimmicks and loopholes [that] delay other companies from selling lower-cost versions of these medications, all the while raising the price … year after year after year.”

“Human health and life is priceless,” she said. “If that’s the metric here, you will always have an excuse for increasing prices for these life-saving drugs.”

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