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U.S. Senators rip pharmacy executives on high prescription drug prices

February 26, 2019

U.S. Senators rip pharmacy executives on high prescription drug prices

WASHINGTON, D. C. - U.S. Senators, including Ohio Democrat Sherrod Brown, on Tuesday grilled a panel of pharmaceutical executives about their drug pricing practices as Congress examines ways to reduce costs and crack down on profiteering.

Brown joined other members of the Senate Finance Committee in chiding witnesses from AbbVie Inc., AstraZeneca, Bristol-Myers Squibb Co., Johnson & Johnson, Merck & Co., Inc., Pfizer and Sanofi for continuing to raise drug prices even though taxpayers subsidize their research and marketing efforts. He said it’s not surprising that they’d the take the tax money, but troubling that Congress continues to let it happen.

“Americans can’t afford to pay for prescription drugs that cost more money than they make in a year,” Brown told them, noting that the median income of a person on Medicare is $26,000 while the average annual cost for a single speciality medication in the United States exceeded $52,000 in 2015. “We can’t continue to give big Pharma the blank check that you’ve had to pay for high priced prescription drugs.”

Drug company executives who testified admitted that the pricing system isn’t working for many patients, but said their prices are partially a result of high research and development costs for tackling some of medicine’s most challenging problems.

AbbVie Inc.’s Richard Gonzalez told the committee that a global drug pricing system in which the United States pays some of the highest prices in the world for drugs supports the pharmaceutical industry’s research and development model. If drug prices in a market the size of the United States were significantly lowered, Gonzalez said drug companies like his wouldn’t be able to invest in as much research.

He noted that if a company like his were to come up with a treatment for Alzheimer’s, drug costs would go up as the overall costs of treating the patient would be reduced.

Merck CEO Kenneth Frazier suggested that doing away with a system where insurers or employers get rebates for use of particular drugs might help reduce costs for patients, who haven’t been getting the benefit of the large rebates and discounts that manufacturers have been paying to pharmacy benefit managers and insurance companies.

“Our current system that incentivizes high list prices and large rebates as a mechanism to keep insurance premiums low means that sick patients are essentially subsidizing healthy patients,” Frazier told the committee. “In this way, our insurance system is broken. We urge you to support action to make sure that all patients benefit from the discounts we make available.”

The committee’s chairman, Iowa Republican Chuck Grassley, said Congress needs to understand what’s going on in the drug pricing supply chain in order to respond in a measured and effective way.

“We’re all trying to understand the sticker shock that many drugs generate,” Grassley said “Especially when some of those drugs have been around for a long time. There is a balance between incentivizing innovation and keeping prices affordable for consumers and taxpayers. Like all systems, things can get out of balance.”

Ohio Republican Sen. Rob Portman attended portions of the hearing, but did not question any of the witnesses. After the hearing, Portman noted that an investigation by the Permanent Subcommittee on Investigations found that a Richmond drug company that makes an antidote to opioid overdoses called EVIZIO had raised its cost by 600 percent to capitalize on the opioid epidemic. After the bad publicity, the drug company reduced its price

Portman said one way to reduce costs would be to allow taxpayers to recoup money from wasted medications sold to Medicare patients in excessively large packages that contain more medicine than the average patient needs. Most of the medications at issue are sold in smaller packages outside the United States, Portman’s office said. Portman said passage of the bill would save seniors and taxpayers billions of dollars in prescription drug costs.

“The bottom line is that a lot of drugs are being thrown away because of the packaging and we should only be paying for the products patients actually use,” said Portman. “This is a relatively small issue in terms of the overall issue but an example of where we could save a lot of money.”

Drug company raised opioid treatment price by 600 percent to capitalize on crisis, says new report from Sen. Rob Portman