Seven executives of top pharmaceutical companies were grilled before a congressional panel Tuesday about the nation’s skyrocketing drug prices, with one senator accusing Big Pharma of blaming everyone but themselves and another saying the execs were “stonewalling” in their answers.
The drama unfolded during a hearing before the Senate Finance Committee, the largest gathering in decades of pharmaceutical executives before a congressional panel.
Sen. Ron Wyden, the ranking member of the committee, blasted Big Pharma as “morally repugnant” and accused the companies of operating in an “unacceptable” way. He grew testy when he believed the executives weren’t being forthcoming about reducing list prices.
“All of this other stuff is window dressing,” Wyden snapped. “You are stonewalling on the key issue.”
At one point, he pressed the chairman and CEO of AbbVie, maker of the arthritis drug Humira, which, according to a recent New York Times story, has doubled in list price since 2012, from about $19,000 a year to $38,000. Wyden wanted to know whether the company makes money on drugs in Germany and other Westernized nations where patients pay, on average, 40% less than Americans.
“Yes, we do,” CEO Richard Gonzalez said.
If that’s the case, Wyden said, “you can do the same thing in the United States.”
“How is that not gouging the American consumer?” he asked. “You are willing to sit by and hose the American consumer and give breaks to those overseas.”
Sen. Steve Daines, R-Montana, sought clarity on who ultimately pays for astronomically high list prices. The patients, he was told by the executives.
“That is, to me, the biggest problem that we have as a country,” Merck CEO Kenneth Frazier said, “as we now have a system where the poorest and sickest are subsidizing others.”
Committee Chairman Chuck Grassley opened the hearing by criticizing pharmaceutical companies, saying that skyrocketing prices are hurting Americans and that the time has come for a reckoning.
“We’ve all seen the finger-pointing. Every link in the supply chain has gotten skilled at that,” said Grassley, R-Iowa. “But, like most Americans, I’m sick and tired of the blame game. It’s time for solutions.”
The committee hearing was a rare display of bipartisanship at a time when the country remains mired in polarization. Grassley said after the more than three-hour hearing that he believed bipartisan legislation on drug prices could come out of his committee.
Six of the seven CEOs said they support legislation to require “advance warnings” of price increases, similar to a California law. The heads of AbbVie and AstraZeneca also said that any fixes would require legislative action by Congress, because the entire system can’t fix itself.
At other moments, the drug executives — and some senators — put the blame on pharmacy benefit managers and insurance companies as complicating the system and driving up prices.
Those answers didn’t sit well with most panel members.
Sen. Johnny Isakson, a Republican from Georgia who has Parkinson’s disease, said he’d recently gone to pick up one of his seven medications at a pharmacy, and one of the meds was $90 more than it was in December.
“I said, ‘how can that be?’ ”
Within an hour, he said, the pharmacy came back with four prices for the same drug. He said it’s “tough” to be an elected official if you can’t explain drug prices to constituents.
“I can’t explain the cost increases,” Isakson said. “We’ve got to get to the bottom of this.”
During one heated exchange, Sen. Maggie Hassan, D-New Hampshire, demanded answers from Johnson & Johnson for what she said was aggressively selling and marketing opioids. Chairwoman and Executive Vice President Jennifer Taubert seemed caught off-guard, defending the company’s handling of opioids as “very appropriate and responsible.”
“It is hard for me to take the industry’s goal here as promoting good health seriously when its behavior to maximize sales of opioids created an epidemic,” Hassan replied.
Also testifying were Olivier Brandicourt, the CEO of Sanofi; Pascal Soriot, the executive director and CEO of AstraZeneca; Giovanni Caforio, chairman and CEO of Bristol-Myers Squibb; and Albert Bourla, CEO of Pfizer.
The executives said that if any changes to the system are implemented, they must be done in a way that doesn’t hamper innovation and research and development.
In his opening statement, Wyden ripped Soriot for complaining about his $12 million salary as “the lowest-paid CEO in the whole industry.”
“He said it was ‘annoying to some extent,’ ” Wyden said. “His company, meanwhile, continues to raise the price of Symbicort,” which is used treat asthma.
The rising costs of drugs have become a hot political issue, with President Donald Trump vowing to take action to bring down prices and lawmakers on both sides of the aisle making similar pledges.
“America has a problem with the high cost of prescription medicines,” Grassley said. “We’re all trying to understand the sticker shock that many drugs generate — especially when some of those drugs have been around for a long time.”
He said he’d heard from people who leave their prescriptions on the pharmacy counter because the meds cost too much, and others who skip “doses of their prescription drugs to make them last until the next paycheck.”
“I’m not a doctor, but rationing one’s medicine doesn’t sound like a safe prescription for health and wellness,” Grassley said.
He acknowledged that drug pricing is a complex issue but then said, “But I think we should all be asking: Should it be so complex?”
In an an opinion piece published Tuesday in the Des Moines Register, Grassley said he wanted answers to a simple question: “Why do prescription drug prices keep rising?”
Last week, Grassley and Wyden began an investigation into insulin prices, sending letters to leading manufacturers Eli Lilly, Novo Nordisk and Sanofi about their recent price increases of up to 500%.
At the start of the hearing, Wyden said he was present decades ago when tobacco executives were called before Congress to explain themselves. “They lied that day,” Wyden said. “This chairman and I expect better than that today.”
Sanofi’s Brandicourt told lawmakers that there was no single cause for rising costs and that it was time to take a comprehensive look at the issue. “I understand the anger,” he said.
More than 650 products had price increases this year, through early February, according to Rx Savings Solutions, which sells software to employers and insurers to reduce drug costs. The industry justifies the moves as essential for investing in research and development. Drugmakers often point out that they see very little of the increases because of the big rebates they distribute to others in the supply chain, including insurers and pharmacy benefit managers, who in turn blame Pharma for setting high list prices.
Among cost-saving ideas from the Trump administration, one suggests setting the reimbursement level for certain drugs administered in doctors’ offices and hospital outpatient centers based on their cost in other countries, which typically pay far less. The so-called International Pricing Index model has faced blowback from many quarters, including some Republican lawmakers.
Democrats have begun pushing a plan to allow the government to directly negotiate the prices of Medicare prescription drugs, saying that such a move could save billions of dollars. The pharmaceutical industry has long resisted such a change.
Pfizer’s Bourla said that his company was committed to reform but that any reform should take a look at all market segments. He said rising drug prices were causing hardships on Americans. “This is forcing patients to forgo taking needed medications or to limit their doses,” he said. “This is bad.”
Grassley said it was an issue that is not going away, and he vowed to keep pressing.