CEOs and senior executives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Merck & Co., Pfizer, Sanofi and Johnson & Johnson appeared before the US Senate Finance Committee on Tuesday to testify about the high cost of drugs in the country. The executives, who continued to blame pharmacy benefit managers (PBMs) and insurers for keeping negotiated discounts on prescription drugs for themselves rather than passing them on to patients, made various proposals to address the problem, including offering incentives to increase use of generic versions of biotechnology treatments and more financial help for patients.
Committee chairman Chuck Grassley stated "there is no question that researchers and doctors have developed treatments and cures for diseases where there were once none, and such innovations take time and money." However, the senator said "there is a balance between incentivising innovation and keeping prices affordable for consumers and taxpayers."
At the hearing, AbbVie was criticised for doubling the price of Humira (adalimumab) to $38 000 per year over a six-year period. When asked why the therapy has a higher cost in the US than in other countries, CEO Richard Gonzalez acknowledged "because Humira plays a very important role in AbbVie's overall funding of R&D."
Facing questions about the rising cost of insulin products, Sanofi noted that out-of-pocket costs for its diabetes therapy Lantus (insulin glargine) for patients with commercial insurance and Medicare have surged 60 percent since 2012 even though the average net price after discounts and rebates is down more than 30 percent over the period. "In this case, not only are discounts apparently not being passed on to patients, but patients are in fact being asked to pay more when PBMs and health plans are paying less for the medicine," remarked CEO Olivier Brandicourt.
Meanwhile, Merck CEO Kenneth Frazier stated that "the list price is actually working against the patient," adding that the US drug price reimbursement system was "regressive" in some ways. However, none of the companies committed to lowering the list prices on their prescription products, with Frazier warning that "outrageous solutions" to drug costs could jeopardise innovation. In October, the Trump administration unveiled a controversial plan aimed at lowering certain prescription drug costs by setting Medicare reimbursements based on the average price a drug fetches globally.
However, the drugmakers all expressed support for a recent proposal that would restrict companies from providing rebates to PBMs and instead encourage them to pass rebates directly to consumers. In particular, AstraZeneca CEO Pascal Soriot indicated he would even "go a step further," saying that "if rebates were removed from the commercial sector as well, we would definitely reduce our list price."
After the hearing concluded, Grassley said the drugmakers "realise there's a problem and I think every one of them is going to help us solve it." Meanwhile, Rob Smith, an analyst at Capital Alpha Partners, said the company executives "stuck to the same talking points we've heard for years." Cowen & Co. analysts suggested that although the hearing would "likely be great theatre," it is unlikely to lead to concrete measures targeting prescription drug pricing.
The news comes after US lawmakers recently introduced various bills targeting drug pricing, including legislation that would permit the Department of Health and Human Services to negotiate prices paid by Medicare Part D and allow consumers to import drugs from abroad. Last week, Grassley and US Senator Ron Wyden announced a probe into rising insulin prices and have sent letters to the heads of Eli Lilly, Novo Nordisk and Sanofi.
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