A Senate committee chaired by Sen. Bernie Sanders grilled the top executives of three major pharmaceutical companies on Thursday, seeking to pinpoint why U.S. taxpayers and consumers pay more for prescription drugs than people in other nations.
The chief executive officers of Bristol Myers Squibb, Johnson & Johnson and Merck appeared before the Senate Committee on Health, Education, Labor and Pensions to defend their drug pricing and spending.
Sanders kicked off the hearing by asking the three executives why their top-selling U.S. prescription drugs are priced higher than other nations.
“Americans are forced to pay higher and higher prices for the drugs they need to survive,” Sanders said. “And let’s be clear, the overwhelming beneficiary of these high drug prices is the pharmaceutical industry.”
The hearing comes as the Biden administration is bargaining with drug companies over Medicare drug prices and empowering the federal government to challenge patents to certain high-priced drugs that were developed with federal research money. Amid federal pressure and changing market dynamics, drugmakers have taken steps to modify the hikes: in January they implemented their lowest median price increase in over a decade.
Bristol Myers Squibb CEO Chris Boerner last month agreed to testify before the committee. Johnson & Johnson CEO Joaquin Duato and Merck CEO Robert Davis agreed to testify following word that he’d likely face a subpoena.
The trio in the hot seat represent three of the drug companies that sued the Biden administration to halt Medicare drug price negotiations and make half of the initial batch of 10 drugs for which prices will be negotiated. Last week, the Biden administration sent initial price offers to makers of the 10 drugs, formally kicking off negotiations.
Drug company executives defend prices, blame drug-pricing middlemen
While the hearing focused on list prices for name-brand drugs, the amount patients pay typically depends on their insurance coverage, drug coupons and complex rebates negotiated by pharmacy benefit managers.
The pharmaceutical executives said the rebates paid to drug pricing middlemen are the key reason why list prices are increasing.
Davis said Merck has faced intensifying pressure to pay deep discounts to drug-pricing middlemen, savings that are not necessarily passed to consumers. These discounts effectively lower the “net price” drug companies collect.
“Merck continues to experience increasing pressure to provide even larger discounts, and the gap between list and net price continues to grow,” Davis said. “And patients are not benefiting from the steep discounts we provide.”
Boerner defended his company’s track record of developing drugs that have extended the lives of people living with HIV and some cancers.
“We should not abandon our system for one that denies patients the broad and rapid access to vital medicines that they appreciate today,” Boerner said.
Report examines pharma money paid to dividends, stock buybacks and executive compensation
Earlier this week, Sanders, I-Vt., issued a committee report saying pharmaceutical companies had charged U.S. patients and taxpayers more for prescription drugs than all other wealthy nations.
The report said the pharmaceutical industry was “ripping off the American people,” highlighting drug companies’ spending on non-research items such as stock buybacks, dividends and executive compensation. The report said popular drugs sold by Johnson & Johnson, Merck, and Bristol Myers Squibb “made more money in the U.S. than the rest of the world combined.”
Among the report’s findings:
∎ Merck’s cancer drug Keytruda generated $43.4 billion in U.S. sales since 2015. By comparison, the drug’s sales totaled $30 billion throughout the rest of the world.
∎ Sales of Bristol Myers’ blood thinner Eliquis reached $34.6 billion in the United States compared with $22.5 billion throughout the rest of the world.
Ken Alltucker is on X, formerly Twitter, at @kalltucker, or can be emailed at [email protected].