Senators fire warning shot at drug companies: No more finger-pointing for high prices
In a major showdown with Big Pharma, senators chided drug companies Tuesday for protecting their monopolies like “Gollum with his ring” and warning pharmaceutical bigwigs they’re sick of them directing blame elsewhere.
“Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them,” Sen. Ron Wyden, Oregon Democrat, said.
Sen. Charles E. Grassley, Iowa Republican, also said he’s sick of companies passing the buck to insurers, pharmaceutical benefit managers or others in the supply.
“We’ve all seen the finger-pointing,” Mr. Grassley said. “Every link in the supply chain has gotten skilled in that finger-pointing.”
Mr. Grassley, chairman of the Senate Finance Committee, decided to haul seven drug-company CEOs to Capitol Hill after making high prescription prices his top priority in the new year.
U.S. voters frequently cite rising costs as one of their biggest concerns, and while both parties and President Trump agree that something has to be done, policymakers are grappling with how far to go with their crackdown on Big Pharma.
Committee members kicked off the hearing by saying high prices are soaking taxpayers and patients alike and by warning the witnesses that lying to Congress is a crime. The companies initially wanted to meet with Mr. Grassley and Mr. Wyden behind closed doors, though the senators insisted on a public airing.
Pundits compared Tuesday’s grilling to tobacco companies who were forced to explain themselves to Congress decades ago.
Unlike tobacco companies, whose products are blamed for premature deaths, the pharmaceutical executives pointed to the lifesaving power of their products.
Merck CEO Kenneth Frazier and Jennifer Taubert, a top executive at Johnson Johnson, pointed to the personal pain of losing their parents to Alzheimer’s disease and lung cancer, respectively, and the role pharmaceutical companies play in finding new cures.
Officials also defended themselves by pointing to the costs of research and innovation, flat or modest price changes in recent years, a Byzantine web of price negotiations that nudge costs higher and the shift toward insurance plans that require patients to pay high amounts out-of-pocket.
Mr. Grassley said he expected CEOs to make these arguments but that list prices set by the companies were still important. The prices set the tone for negotiations downstream, and Medicare enrollees often pay a percentage of the list price in the form of coinsurance.
“For those people, the list price is very meaningful,” Mr. Grassley said.
Mr. Frazier and Bristol-Myers Squibb CEO Giovanni Caforio said they would support new models that price products based on their value to patients.
Executives also said they would support the advent of new generics or arrangements that pass along rebates directly to Medicare enrollees initiatives being pushed by the Trump administration.
Yet the CEOs were cool to Mr. Trump’s idea to align U.S. prices to just slightly above what other developed nations pay for the same drugs.
AbbVie Inc. CEO Richard Gonzalez said if U.S. prices were slashed that dramatically, his company would not be able to invest in research and development.
Yet Mr. Wyden said companies still make a profit on drugs overseas, so it seemed like his constituents were getting hosed.
“How is that not gouging the American consumer with high prices?” Mr. Wyden said.
The panel is also hearing from executives at AstraZeneca, Pfizer and Sanofi.