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By Leigh Ann Caldwell
WASHINGTON – Senior officials at seven major pharmaceutical companies told a Senate committee on Tuesday that they could not commit to lowering the price of prescription drugs for everyday use even admitting that they controlled these prices. And one leader acknowledged that the high cost of drugs hit the poorest patients the hardest.
This hearing, called to testify before the Senate Finance Committee, marks the first time that many pharmaceutical executives have appeared before Congress. Senators also asked tough questions about the rising cost of drugs and the system that allows them.
The "list price" of drugs was a topic of central interest to Senators as an artificial selling price set by pharmaceutical companies. Pharmaceutical companies argued that discounts, generally intended to provide financial benefits to the benefit manager of third-party pharmacies, which manages drug price negotiations, actually resulted in increased costs to consumers.
Kenneth Frazier, President and CEO of Merck, admitted at a remarkably straightforward moment that it is the poorest patients who pay the most for their medications by paying the advertised price while others benefit from discounts.
"It's the people with the least means who pay the most," Frazier said. "This is our biggest problem as a country, we have a system where the poorest and the sickest subsidize others."
It was a rare bipartisan meeting of powerful industry leaders who insisted that prices stabilized in 2018 and 2019. Sen. Ron Wyden of Oregon, a Democrat in the committee's standings, said that is to pharmaceutical companies to lower prices.
"Drug prices are astronomical because that's where pharmaceutical companies and their investors want them," he said. "The brakes have been reduced by the price of pharmaceuticals and American families take over the passenger seat, terrified thereafter.
Leaders, however, said that a series of structural impediments prevented them from cutting their costs, including government regulations imposed by Medicare. However, they seemed willing to support the ideas imposed by Congress to reduce costs, but did not agree to do it alone.
"The system itself is complex and interdependent, and no company can unilaterally lower catalog prices without encountering financial and operational disadvantages," Frazier said. "But if we bring all parties together around the table to do what is best for the patient, I think we can put in place a system that works for all Americans."
On Tuesday, it was the first major hearing on CEO pricing practices since Heather Bresch, CEO of Mylan, was brought before the House of Representatives oversight committee in 2016 to question on a 500% increase in the price of Epi-Pens.
Because the problem concerns millions of Americans, dealing with rising drug prices is politically advantageous for lawmakers. But to implement any legislative change, they will have to fight against a powerful industry that generously contributes to political efforts and spends millions of dollars trying to influence legislation. According to the Center for Responsive Politics, the pharmaceutical industry has spent $ 28 million in 2018 to lobby.
Leaders on Tuesday, from AbbVie, Merck, AstraZeneca, Bristol-Myers Squibb, Janssen, Pfizer and Sanofi, said there were systemic issues with cost implications. high for consumers.
They said they supported general ideas to reduce costs, including removing discounts and demonstrating more pricing transparency, but the executives also rejected the idea that they were going to reduce costs. they were solely responsible for the increase in the number of drugs.
They pointed out a statistic that Medicare consumers pay 13% of their own pocket for prescription drugs, compared to only 3% for a hospital stay.
Some Senators have linked the high cost of drugs to the high salaries of executives or the profitability of the business.
Senator Bob Menendez, D-N.J., pointed out that the tax reform allowed pharmaceutical companies to spend $ 40 billion to buy back their own shares. He asked if the CEOs had used any of their tax breaks to lower the price of drugs, which most CEOs answered in the negative.
"This has allowed us to invest an additional $ 30 billion (research and development) and capital investment in the United States over the next four years," said Jennifer Taubert, executive vice president of Janssen Pharmaceuticals, the division. Johnson & Johnson Pharmaceutical.
Merck CEO Frazier said his company's tax rate had increased and Sanofi chief executive Olivier Brandicourt said his company had not benefited much from the tax cut because it was a French company.
The hearing comes after the Trump administration tried to control the cost of Medicare drugs through the executive branch, including a rebate ban, which would change the way in which drug prices are negotiated. Medicare beneficiaries account for 30% of prescription drug expenditures in 2016, according to the Kaiser Family Foundation, for a total of $ 130 billion.
On Tuesday, however, the leaders expressed their opposition to the government's authorization to negotiate the price of drugs.
The finance committee has separately launched a survey on the sharp increase in insulin and the three major insulin manufacturers, Eli Lilly, Sanofi and Novo Nordisk. The executives of Eli Lilly and Novo Nordisk were not present at the hearing. President Donald Trump's Secretary of Health and Social Services, Alex Azar, was a senior executive at Eli Lilly for five years, until Trump asked him to manage HHS.
Senator Chuck Grassley, R-Iowa, chairman of the committee, said he was satisfied with the hearing, noting that companies did not show their hands "as much as I thought."
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