Drug company execs under pressure to testify

Drug company executives are resisting calls to testify publicly before a new GOP-led inquiry into their pricing practices, setting up a showdown with Senate Finance Committee Chairman Chuck Grassley (R-Iowa).

The pressure for industry CEOs to appear before Congress is mounting as scrutiny on their business practices intensifies in Washington. On Tuesday, both the Democratic-led House Oversight and Reform Committee and the Republican-led Senate Finance Committee opened a series of hearings into drug prices. 

Grassley said he asked several drug companies to testify, with all but two small companies refusing.

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The chairman’s request poses a tough choice for drug companies as they try to navigate congressional inquiries and risk being subpoenaed by lawmakers to force them into testifying. 

Grassley said he would be “insistent” that drug company executives testify
publicly. 

“They’ll appear,” Grassley said when asked about issuing a subpoena. “I don’t want to use that word because it’s a club that you shouldn’t have to use when you’ve got legitimate questions to ask on the basis of transparency.”

Michael Zona, a Grassley spokesman, added that “one excuse given by a pharmaceutical company for not testifying was that language would be a barrier, which was a bit curious given that the CEO has appeared on cable news.”

He said Grassley would follow up with the drug companies who declined his request. The chairman has so far declined to publicly identify those companies.

“I can imagine it would be a pretty ugly call for the person from the Washington office who has to call the CEO and tell them they’re going to [have to testify],” said Ian Spatz, a former vice president at Merck who is now a consultant at Manatt, Phelps & Phillips. “It’s not something any CEO is going to be eager to do.”

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Spatz, though, said he expects that “over time … it’s going to happen and there will be CEOs that will appear.”

It’s not just the Senate Finance Committee that is putting pressure on drug companies.

On Wednesday, the House Energy and Commerce Committee sent letters to the three main companies making insulin — Eli Lilly, Novo Nordisk and Sanofi — pressing them for answers about the high cost of the crucial diabetes drug. 

And the House Oversight and Reform Committee sent letters earlier this month to 12 major drug companies seeking information on their pricing. 

Rep. Elijah Cummings (D-Md.), the chairman of the Oversight and Reform Committee, has long railed against drug companies for their prices and could seek testimony from companies, in addition to Grassley. 

Asked on Wednesday if he would call drug company executives to testify, Cummings said: “We have requested documents; once we review those documents, we’ll make that determination.”

A lingering question, though, is whether the investigations will actually lead to any changes. Both Democrats and Republicans, including President Trump, have said that addressing high drug prices is a priority. But the hearing this week highlighted how far apart the parties are on the right solutions, making it unclear whether any significant legislation can get through a divided Congress. 

Still, drug companies are on edge. 

“There’s some definite concern that bad ideas can move forward at a time of heightened interest and heightened tension and heightened politics,” Spatz said.

GOP senators, many of whom are less willing than Grassley to target the pharmaceutical industry, are being closely watched to see how far they are willing to join his fight.

Many of the questions on Tuesday, from GOP lawmakers in particular, targeted not drug companies themselves but the drug negotiators known as pharmacy benefit managers (PBMs). Members of both parties said it is not clear the discounts PBMs get from drug companies are making their way to patients.  

Some drug pricing advocates worry the focus on PBMs takes attention off the prices set by drug companies themselves. 

Grassley’s colleagues though made it clear they want more answers from the drug industry.

Sen. John Cornyn (R-Texas) questioned why the price of insulin is so high. 

“It strikes me as bizarre that 100 years after insulin was started to be used to treat diabetes, that we still have a system that guarantees an inflated price even though the cost of the research and development, which I thought was the rationale in the first place, is inapplicable,” he said.

Grassley vowed that the price of insulin would be a particular focus of future hearings.  

Spatz said that hearings, even with sharp questions for drug company CEOs, won’t resolve the many complicated issues over pricing.

“I don’t think it will have any effect in terms of the issues themselves,” Spatz said of a potential hearing with drug company CEOs. 

Still, the optics of lawmakers lambasting the industry’s top executives before cameras has some worried. Lawmakers from both parties appear eager for that opportunity.

During Tuesday’s Senate Finance Committee hearing, the top Democrat on the panel, Sen. Ron Wyden (Ore.), backed Grassley’s calls in much sharper language.

Wyden likened drug companies to Big Tobacco.

“They all lied to me, but at least they showed up,” Wyden said. “Drugmakers are going to have to show up as well.”