The Senate Finance Committee will welcome leaders from Pfizer, Merck, AbbVie and other drug makers on Tuesday. (Photo11: smartstock / Getty Images)

Expect sparks to fly Tuesday as senators have a rare opportunity to grill exorbitant prescription drug prices under the umbrella of seven major pharmaceutical companies.

The Senate Finance Committee will host leaders from Pfizer, Merck, AbbVie and other drug makers. The chairman of the committee, Chuck Grassley, of Iowa Repubilcan, said he hoped the hearing would lift the veil on how drug manufacturers set prices – and how they justify the culture of secrecy surrounding these decisions.

Expect the committee to talk more about this in the coming months, especially with those responsible for the benefits of pharmacies, as legislators call for legislation to reduce health care costs. But first, here's what you should know before the hearing.

1. Most lawmakers have taken money from drug manufacturers, including senators on this committee.

Skeptics are quick to point out that the pharmaceutical industry is one of the most generous benefactors of Congress. In 2017 and 2018, members of the Senate Finance Committee have received more than $ 2 million from political action committees associated with pharmaceutical companies, including the companies they will hear on Tuesday, according to an analysis. from Kaiser Health News.

Senator Ron Wyden of Oregon, who has been the Democratic leader of the committee since 2014, including a president's term, has received about $ 163,000 since 2007 from drug manufacturers and will question leaders, according to the analysis. from KHN.

Grassley, who took over the presidency in January after also serving in the early 2000s, has received about $ 97,000 from these drug makers since 2007.

These figures are relatively little compared to those of colleagues. In the last election only, Democratic Senator Robert Menendez of New Jersey – headquarters of Johnson & Johnson and Merck, as well as Sanofi's US headquarters – received more than $ 154,000 from the political committees of drug manufacturers .

Campaign finance analysts advise against equating money given to purchased votes. But great contributions can attract the attention of a politician and open doors when lobbyists from a company come to call him.

More: Democrats examine drug prices, a first step on Congress path to reduce prescribing costs

More: The promises of the pharmaceutical industry to reduce drug prices have already been heard

More: Prescription drug prices continued to rise in 2017, but a closer look has somewhat contained them

2. Drug costs have gone up, but the facts are a bit complicated.

Grassley talks about "soaring prescription drug costs."

PhRMA, the brand-name drug lobby, said: "Retail drug costs have only gone up 0.4% in 2017, the slowest rate since 2012."

It is likely that you will hear these statements again. Both are true. Neither tells the whole story.

Pharmaceutical companies have been increasing the prices of brand name drugs for years. The prices of hundreds of brands have risen an average of 6% for the beginning of 2019, according to the consulting firm Rx Savings Solutions. Some rose up to 9.5%.

These are list prices. Pharmaceutical companies often note that discounts and rebates reduce the net cost to insurers. But this does little to relieve the many patients whose direct costs are part of the ever-increasing catalog price. They do not receive a discount.

The cost of drugs has risen much faster than inflation, even taking into account discounts and the effects of less expensive generic drugs. The total cost of prescription drugs at retail has increased at an average annual rate of 5.2% over the five years ending in 2017, according to the Department of Health Services and Social Services.

The total cost of retail drugs has only increased 0.4% in 2017, according to HHS data. But they have grown so slowly in the past to leave.

HHS data does not measure multibillion-dollar costs for chemotherapy, anesthetics and other drugs administered in hospitals. Total spending on drugs by hospital has increased by 19% between 2015 and 2017, according to a recent study sponsored by specialist groups of hospitals. This is an additional burden on the system and another source of pressure on drug prices.

3. The highest paid executives who testified earned more than $ 22.5 million in 2017.

While heartrending stories of patients rationing expensive but life-saving drugs are becoming more commonplace, pharmaceutical company executives are under fire for millions of dollars every year at home.

The most recent year for which the figures are available is how much the executives who testified in 2017 are calculated according to the total compensation figures in each company's documents:

► Richard A. Gonzalez, President and Chief Executive Officer of AbbVie Inc., maker of the leading Humira drug for the treatment of rheumatoid arthritis Humira: $ 22,625,243.

► Pascal Soriot, Executive Director and CEO of AstraZeneca, manufacturer of cancer drugs, diabetes and other drugs: £ 9,435,000 (approximately $ 12,300,000).

► Giovanni Caforio, Chairman of the Board and Chief Executive Officer of Bristol-Myers Squibb Co., which manufactures many medicines for cardiovascular disease, cancer and other drugs: $ 18,687,123.

► Kenneth C. Frazier, President and Chief Executive Officer of Merck & Co. Inc., the company that makes the HPV Gardasil Vaccine and the Singulair Asthma Medication, among other drugs: $ 17,643,087.

► Olivier Brandicourt, President and Chief Executive Officer of Sanofi, one of the world's leading drug manufacturers, renowned for vaccine production, including: € 9,754,318 (approximately $ 11,050,000).

► Albert Bourla, now CEO of Pfizer, realized $ 8,836,301 in 2017, but he was not CEO at the time. He was then president of the Pfizer Innovative Health Group.

► No compensation information from 2017 was found for Jennifer Taubert, Executive Vice President and Global President of Pharmaceuticals at Johnson & Johnson. Taubert has been promoted to oversee pharmaceuticals in 2018.

4. Beware of claims by drug manufacturers that prices must remain high in order to pay for the next big cure.

For years, drug manufacturers have defended rising prices by claiming that they must bear the costs of research and development to enable future breakthroughs. They note that most drugs never reach the market. So how much does it cost to develop a new prescription drug? About $ 2.6 billion, according to an often cited analysis published in late 2014 by the Tufts Center for the Study of Drug Development.

But critics have questioned this figure. They note the funding that the center receives from the pharmaceutical industry; the secrecy surrounding the data, making the study non-duplicable; and the inclusion of nearly $ 1.2 billion in investment returns lost during development in this total, among other things.

As reported by Kaiser Health News, the company's own audited financial statements contradict industry claims: in 2016, for example, the top 10 publicly traded drug companies in the United States had pre-tax profit margins of 27%, even after have advertising and sales.

It is also becoming increasingly common for drug companies to acquire revolutionary treatments, not through their own research and development, but through the purchase of smaller companies that have discovered a new drug. Pfizer, the largest drug company in the world, owes its growth to this practice.

5. The Trump administration showing interest in this issue, the Congress is thinking.

Legislators have already touted various legislative solutions – and, sign of the importance of drug costs to voters, most proposals are sponsored by a presidential candidate.

Many ideas are familiar. Some would allow the importation of drugs. Drug manufacturers would be required to set prices no higher than in a few other developed countries. One of the most popular ideas would allow Medicare to negotiate the price of drugs.

Grassley, as Chair of the Finance Committee, will likely play a key role in choosing a solution. He said last month that he was opposed to government negotiations on drug prices. This aligns it with many Republicans and throws cold water on an idea supported by many Democrats.

Grassley introduced two bills in January with Democrat Senator Amy Klobuchar of Minnesota, presidential candidate of 2020. One would target brand-name drug companies that pay generic drug companies to stifle competition, and another would allow individuals to import drugs from Canada.

While the Trump administration is working on its own proposals to cut costs, lawmakers are hopeful.

"We feel this is a good time and that the government and Congress support concrete action," Grassley spokesman Michael Zona said.

KHN's data editor, Elizabeth Lucas, and data correspondent, Sydney Lupkin, contributed to this report.

Kaiser Health News (KHN) is a non-profit news service covering health issues. It is an independent editorial program of the Kaiser Family Foundation which is not affiliated with Kaiser Permanente.

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