Sparks flew on Capitol Hill Thursday as the CEOs of three drug companies faced questions from the Senate Committee on Health, Education, Labor and Pensions about why drug prices are so much higher in the United States than they are in the rest of the world.
The executives from Bristol Myers Squibb, Johnson & Johnson and Merck spent almost three hours in front of the committee going back and forth about pricing practices and how the companies spend their money.
“We are all aware of the many important lifesaving drugs that your companies have produced,” said a noticeably subdued Sen. Bernie Sanders, Vermont Independent and the committee chairman. “That is extraordinarily important. But as all of you know, those drugs do nothing for anybody who cannot afford it.”
Merck’s cancer drug Keytruda costs $100,000 more in the U.S. than it does in France, according to a committee analysis. Bristol Myers Squibb’s blood thinner Eliquis costs almost 10 times more in the U.S. than in Germany. Johnson & Johnson’s arthritis drug Stelara costs five times more in the U.S. than it does in Japan.
Patients turn to GoFundMe
The executives made familiar arguments that the U.S. pays more for drugs but also gets new drugs faster. The drugmakers also said that middlemen called pharmaceutical benefit managers, or PBMs, take a big share of the list prices for themselves.
“Their negotiating strength has increased dramatically,” Merck CEO Robert Davis said. “In contracting with them, Merck continues to experience increasing pressure to provide even larger discounts. And the gap between list and net price continues to grow, and patients are not benefiting from the steep discounts we provide.”
However, the legislators were prepared and often shot back, for instance, that while drugs take longer to get on the market in Japan and Canada, for instance, that hasn’t hurt those countries’ life expectancies. In fact, people in Japan and Canada live longer, on average, than they do in the United States.
Sanders asked Merck’s Davis if he had ever searched GoFundMe to see if anyone was trying to raise money to pay for Keytruda. He said he hadn’t. Sanders said his staff had.
“We have found over 500 stories of people trying to raise funds to pay for their cancer treatments,” he said. “And one of those stories is a woman named Rebecca, the school lunch lady from Nebraska with two kids who died of cancer after setting up a GoFundMe page because she could not afford to pay for Keytruda. Rebecca had raised $4,000 on her GoFundMe page, but said the cost of Keytruda in a cancer treatment was $25,000 for an infusion every three weeks.”
Drama behind the scenes
The CEOs of Merck and Johnson & Johnson initially declined to testify. Sanders said they told his staff they didn’t have the expertise to talk about drug pricing.
“Merck went so far as to tell our staff that their CEO is a tax attorney who is not an expert on prescription drug prices,” Sanders told reporters on Jan. 25, calling the reasons companies offered for declining to testify “laughable to absurd.”
The committee was about to vote on subpoenaing the CEOs when they agreed to testify voluntarily.
The trade group PhRMA, which stands for Pharmaceutical Research and Manufacturers of America, emailed a preemptive statement Wednesday that said comparing drug prices in the U.S. to those abroad doesn’t tell the whole story. The trade group said that new medicines launch earlier in the U.S. than in the rest of the world, giving Americans faster access. It also pointed the finger at other high health care spending and PBMs.
“Allowing foreign governments to influence U.S. prices won’t fix America’s health care system,” PhRMA wrote.
Senate report documents drugmakers’ financial choices
Early this week, the HELP Committee released a report that found Bristol Myers Squibb, Johnson & Johnson and Merck spend more on executive compensation, stock buybacks and dividends than they do on research and development.
“In other words, these companies are spending more to enrich their own stockholders and CEOs than they are in finding new cures and new treatments,” Sanders reiterated in his opening statement at the hearing. “Now, the average American who hears all this is asking a very simple question. How does all of this happen? “
The report showed that these companies make more money selling their popular drugs in the U.S. than selling them in the rest of the world combined. The report also found that while some drug prices climb in the U.S., they go down or stay the same elsewhere.
Transcript:
SACHA PFEIFFER, HOST:
Merck’s cancer drug, Keytruda, costs $100,000 more in the United States than it does in France. Bristol Myers Squibb’s blood thinner, Eliquis, costs almost 10 times more in the U.S. than in Germany. Senators questioned three drug company CEOs today about why American drug prices are so much higher than they are anywhere else. NPR pharmaceuticals correspondent, Sydney Lupkin, is here to tell us how it went. Hi, Sydney.
SYDNEY LUPKIN, BYLINE: Hi, Sacha.
PFEIFFER: This is not the first time legislators have held a hearing on drug prices. What was different about this one?
LUPKIN: Well, for one, the senators seemed especially prepared this time around. We’ve all probably heard the industry’s explanations about how lowering prices would kill innovation. And so a few days before this hearing, the committee put out a report about how these companies were determining prices and spending their money. All three made more money on popular drugs in the United States than in the rest of the world combined. All three spent more on executive compensation, stock buybacks and dividends than on research and development. So that’s the place that this hearing was really starting from.
PFEIFFER: And I understand there was some drama even before this report was released.
LUPKIN: Right. Two of the CEOs declined to testify at first. Merck said its CEO was a tax attorney and therefore didn’t know about drug prices. But once the committee was weighing whether to subpoena them, they reconsidered. Here’s HELP Committee chair Senator Bernie Sanders addressing them today.
(SOUNDBITE OF ARCHIVED RECORDING)
BERNIE SANDERS: We are aware of the many important lifesaving drugs that your companies have produced, and that’s extraordinarily important. But I think, as all of you know, those drugs mean nothing to anybody who cannot afford it.
PFEIFFER: Sydney, at today’s hearing, how did the CEOs respond to some of the questions being fired at them?
LUPKIN: You know, they made some familiar points about how high prices in the U.S. – the prices are higher in the U.S., but patients here actually get faster access to cures. And while there is some truth to that, Sanders and others were quick to point out that Americans aren’t living as long as people in Canada or Japan, despite getting faster drug access. The drug company CEOs pinned some of the blame on middlemen – pharmacy benefit managers, or PBMs, who take a big chunk of that money that comes from high list prices. Here’s Merck CEO Robert Davis.
(SOUNDBITE OF ARCHIVED RECORDING)
ROBERT DAVIS: Their negotiating strength has increased dramatically. In contracting with them, Merck continues to experience increasing pressure to provide even larger discounts. And the gap between list and net price continues to grow. And patients are not benefiting from the steep discounts we provide.
LUPKIN: Several senators responded that these companies aren’t exactly hurting. They’re still making most of their profits in the U.S.
PFEIFFER: It sounds like lowering drug prices is a popular move. Did the senators seem like they were in agreement with that?
LUPKIN: You know, they were, but they weren’t exactly on the same page. At the start of the hearing, ranking member, Bill Cassidy, a Republican from Louisiana, faulted Sanders for organizing a show trial for political points rather than to craft legislation. But he did press the CEOs with some tough questions of his own. Some other Republicans – Mitt Romney, Rand Paul – talked about how this is just capitalism, and, of course, drugmakers are setting the highest prices possible, and good for them. But several Democrats asked about how these companies use loads of patents to block competition in the U.S., a point echoed by experts testifying later. The Democrats also got the CEOs to admit, for example, that they’re still making a profit on drugs with lower prices outside the U.S. Congress has already passed some legislation to curb high drug prices here. We’ll see if this leads to more.
PFEIFFER: That’s NPR’s pharmaceuticals correspondent, Sydney Lupkin. Thank you for covering this.
LUPKIN: You bet.
(SOUNDBITE OF BUN B AND STATIK SELEKTAH SONG, “STILL TRILL (FEAT. METHOD MAN AND GRAFH)”)
