Thursday, February 22

CEOs of J&J, Merck and Bristol Myers Squibb defend drug prices at Senate hearing

The CEOs of three major pharmaceutical companies defended their drug prices before the Senate Health Committee on Thursday, drawing them further into a confrontation with lawmakers and the Biden administration over the cost of some of the most widely used prescription drugs.

Lawmakers, including Sen. Bernie Sanders of Vermont, the committee’s chairman, noted that companies charge more in the United States than in other wealthy countries, accusing them of profiting at the expense of American patients. Pharmaceutical executives – from Johnson & Johnson, Merck and Bristol Myers Squibb – admitted that patients in the United States pay too much, but said new drugs are arriving there faster than anywhere else in the world.

Sanders, an independent who made keeping drug prices down a major reason for his final years in Congress, acknowledged that companies had produced life-saving drugs. But he identified several widely used drugs, including Bristol Myers Squibb’s blood thinner Eliquis, which he noted could be purchased for much less in Canada than in the United States.

“Those drugs mean nothing to people who can’t afford them,” Sanders said, adding that “millions and millions of people can’t afford the outrageously high cost of prescription drugs in this country.”

The three executives who testified – Joaquin Duato of Johnson & Johnson, Robert M. Davis of Merck and Christopher Boerner of Bristol Myers Squibb – acknowledged that drug prices were often higher in the United States than in other wealthy countries.

But they said lower prices in Europe and Canada, where governments are more focused on containing costs, resulted in crucial downsides, such as long waits for new drugs and limited insurance coverage.

“The United States has built a healthcare system that prioritizes patient and physician choice, as well as the broad and rapid availability of cutting-edge medicines,” Boerner said.

At one point, Sanders, who accused companies of using drug profits to enrich executives and shareholders even as patients struggled to pay for the drugs, tried to press Boerner to promise that the company would lower the U.S. sticker price of the drugs . Eliquis to the one in Canada. Mr. Boerner refused, citing differences in Canada’s health-care system.

The hearing took place as a new federal program was about to be launched that authorizes Medicare to negotiate the prices of some expensive drugs. Federal health officials last week made their initial offers to the makers of the first 10 drugs selected for negotiations, a list that includes Eliquis and four other drugs sold by companies whose executives testified Thursday. Drugmakers, including all three companies represented at the hearing, have filed a series of lawsuits arguing that the trading program is unconstitutional.

As pharmaceutical executives sat before them, lawmakers described the agonizing decisions that patients with high drug costs had faced. Mr. Sanders mentioned a Nebraska woman who he said had died of cancer after starting a GoFundMe campaign to pay for Keytruda, a blockbuster cancer drug from Merck.

Senator Christopher S. Murphy, Democrat of Connecticut, said one of his constituents on Eliquis had to choose between the cost of medicine, food and rent.

Republicans on the committee pointed to what they said were legitimate market incentives that companies used to set the prices of their drugs.

“In capitalism, if you run a business where you have a fiduciary responsibility to your owners, you try to get the highest price possible,” said Senator Mitt Romney, Republican of Utah. He added: “Do you think Chevrolet is going to sit down and say, ‘Man, how can we lower the price of this Chevrolet?’ No, it’s like, ‘How high can I get to maximize profit for my shareholder?'”

The hearing came after a standoff between Sanders and two pharmaceutical executives, Johnson & Johnson’s Duato and Merck’s Davis, who agreed to testify only after being threatened with subpoenas. Last month the two companies suggested that Mr. Sanders was seeking revenge for their lawsuits challenging Medicare’s price negotiation program.

Senator Bill Cassidy of Louisiana, the top Republican on the commission, said the commission’s strategy has been to “threaten a subpoena when CEOs suspect they won’t get a fair answer, hold the hearing, get statements to effect, then choose another set of CEOs for a show trial.”

“But we don’t pass meaningful legislation,” he said.

Brand-name drug prices in the United States in 2022 were on average at least three times higher than those in 33 other wealthy countries, according to a recent report funded by the Department of Health and Human Services, even after taking into account rebates that reduce how much they pay American health plans and employers.

Comparing drug prices in the United States to those in other countries can be tricky because the healthcare systems are very different. While European countries rely on a centralized negotiator, the U.S. system is fragmented, with tens of thousands of health plans and employers relying on intermediaries to handle negotiations.

While many prescription drugs can be purchased for much less in European pharmacies, insurance coverage is often broader in the United States, meaning American patients sometimes face lower out-of-pocket costs than Europeans for the same drugs .

During the hearing, drug company executives accused intermediaries known as pharmacy benefit managers of burdening patients with high out-of-pocket costs. These companies get rebates from manufacturers that reduce the bill for American health plans and employers, but not for patients. Benefits managers earn more when a drug’s sticker price is higher, but patients often have to pay more. Lawmakers have proposed making modest changes to benefits managers’ practices.