Pharmaceutical executives on Capitol Hill answer questions on rising drug costs
busracavus/iStock(WASHINGTON) — The top executives from seven major drugmakers told a Senate committee Tuesday that their industry isn’t solely to blame for historically high drug prices, setting up a clash with lawmakers who insist the companies are gaming a broken system.
The testimony from several drug industry CEOs is the first of its kind following President Donald Trump’s promise last year that the industry would agree to “massive” pricing cuts.
None of the executives in their prepared testimony promised cuts to their pricing, although they agreed to work with Congress to find a solution. The focus, they said, should be on fixing a shadowy system reliant on rebates and discounts that are spread unevenly across patients.
Testifying were the CEOs of AbbVie, AstraZeneca, Bristol-Myers Squibb, Pfizer and Sanofi, and a top executive for Johnson & Johnson.
“Some would blame (high drug costs for seniors) solely on high drug prices, and we agree that price should certainly be part of the discussion,” said Richard Gonzalez, CEO of AbbVie, in his prepared remarks.
AbbVie makes the popular arthritis drug Humira. The company was sued last year by the state of California, which alleged that AbbVie gave doctors kickbacks to prescribe Humira, including cash, meals, drinks and free trips. AbbVie denies the allegations.
“But it’s also important to acknowledge that science has enabled us to advance the standard of care far beyond what was possible” when Medicare prescription coverage was created, Gonzalez said.
Sen. Charles Grassley, the new chair of the Senate Finance Committee, said he still wants answers on what drugmakers can do to drive down high list prices, which often translate to bigger copays.
“We’ve all seen the finger pointing. Every link in the supply chain has gotten skilled at that,” said Grassley, R-Iowa, in a prepared statement. “But, like most Americans, I’m sick and tired of the blame game. It’s time for solutions.”
Grassley also took aim at tactics that brand-name drugmakers use to keep cheaper generics off the market. One practice, documented by the U.S. Food and Drug Administration, is for drugmakers to block access of samples of their brand-name products so that generic developers can’t do the required testing. Another is for companies to make trivial changes to drugs shortly before their patent ends in a bit to extend exclusive rights to the drug.
Overall, drug spending has risen rapidly in recent decades as pharmaceutical companies churn out new, groundbreaking drugs with high price tags that industry executives say are needed to recoup research costs.
Last week, Grassley and Democratic Sen. Ron Wyden of Oregon said they were launching a joint investigation into the price of insulin, a hormone used to treat diabetes for an estimated 30 million Americans. Sanofi, headquartered in Paris, is one of three major insulin-makers in the U.S. The senators said they wanted information on how prices shot up by 500 percent or more when the drug has been on the market for nearly a century.
According to a committee letter to Sanofi, the price of Lantus insulin increased from $244 to $431 between 2013 and 2019, an approximate 77 percent increase.
The goal of lower drug prices has emerged as a rare consensus among Republicans and Democrats, although the two sides have yet to develop a long-term comprehensive plan. At one point last July, Trump aimed his famed Twitter account at Pfizer, the biggest drugmaker in the U.S. that has developed such drugs as Viagra and the high-cholesterol pill Lipitor.
“Pfizer & others should be ashamed that they have raised drug prices for no reason,” he tweeted.
Pfizer agreed to temporarily roll back price hikes, but by fall, then-Pfizer CEO Ian Read told analysts in a conference call that the company would return to “business as normal” in January.
The administration has proposed some new regulations too, although they are still working their way through the rulemaking process and aren’t in effect yet. One proposal would upend the usual system of drug rebates when people buy prescription drugs through Medicare or Medicaid. The plan would prohibit drug makers from offering discounts or rebates to “pharmacy benefit managers” that administer drug plans. Instead, the manufacturers would be encouraged to provide rebates directly to consumers. Democrats have said they are skeptical as to whether it would drive down costs and expressed concerns it could wind up raising them instead.
Another proposal, announced last fall, is to limit what it pays for certain drugs for Medicare recipients by tying the price for some drugs to prices paid overseas. The measure, which would be phased in over several years, would only apply to certain types of drugs via Medicare that are administered by a physician. The drug industry fought back and said the administration was discouraging innovation.
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