Members of the Senate Finance Committee grilled pharmaceutical executives during a public hearing Tuesday about their role in rising drug costs, an issue that has elicited outrage from the American public and members of Congress.
The leaders of seven drug companies told members of the Senate on Tuesday they want to do something about high prescription costs but wouldn’t commit to dropping list prices.
Drugmakers blamed a convoluted supply chain, involving insurance companies and middlemen, whom they argue do not pass on savings to patients.
But senators said they weren’t buying those explanations.
{mosads}“We cannot allow anyone to hide behind the current complexities to shield the true cost of a drug,” said committee chairman Chuck Grassley (R-Iowa).
“We’ve all seen the finger pointing. Every link in the supply chain has gotten skilled at that. But, like most Americans, I’m sick and tired of the blame game. It’s time for solutions,” he said.
Lawmakers are angry about high drug costs, making the issue one where a divided Congress might be able to find compromise. There has been a flurry of activity on the issue in the new Congress.
Grassley is working with Democrats on bills to crackdown on tactics that branded drug companies use to shut out generic competition. He and the committee’s top Democrat have launched investigations into rising insulin costs, and the committee plans to have more hearings on drug prices.
Lawmakers on Tuesday pushed manufacturers to drop list prices, but executives said that, with the current structure of the supply chain, it would put them at a financial disadvantage.
They also argue that list prices don’t reflect what patients actually pay for drugs, because drugmakers give discounts to insurance companies and middlemen.
“If you bring a drug to the market with a low list price in this system, you get punished financially and you get no uptake because everyone in the supply chain makes money as a result of a higher list price,” Merck CEO Kenneth Frazier told senators. “The system itself is complex and interdependent and no one company can unilaterally lower list prices without running into financial and operating disadvantages that make it impossible to do that.”
But senators argue that high list prices hurt patients with high-deductible plans and those whose copays for drugs are based off percentages of the list prices.
“I think you and others in the industry are stonewalling on the key issue, which is actually lowering list prices,” the committee’s top Democrat Ron Wyden (Ore.) said to Pfizer CEO Albert Bourla. “Reducing those list prices is the easiest way for American consumers to pay less at the pharmacy counter.”
Sen. Debbie Stabenow (D-Mich.) specifically called out Richard Gonzalez, CEO of AbbVie, which manufacturers Humira, an autoimmune drug that can cost patients thousands of dollars a year.
“I think that you charge more here because you can,” she said. “American taxpayers are subsidizing all of you to be able to have incredibly high profits.”
Gonzalez argued that Humira’s profits help fund the research and development of other drugs, and that the company provides drugs to some patients who can’t afford them.
Drugmakers said Congress and the Trump administration need to realign the entire system before they can drop list prices.
The executives also said they support a proposal from the Trump administration that would eliminate Medicare rebates paid by drug manufacturers to insurers and industry middlemen and give them directly to patients at the pharmacy counter.
Drug manufacturers give these discounts to ensure favorable placement on the lists of drugs insurers cover, thus boosting profits. But they argue these discounts often don’t trickle down to patients, and that insurers and middlemen demand higher rebates.
“None of the close to $12 billion of rebates that Pfizer paid in 2018 found their way to American patients,” Bourla said.
But all of the executives present said they would only lower list prices if the rebates were eliminate in private plans as well, which is not part of the proposal.
Most of the drug executives also said they support Grassley’s Creates bill that would speed the development of generic drugs.
That stance is a remarkable turnaround for an industry that has lobbied hard over the past few years to block the bill from advancing.
{mossecondads}Senators also hammered executives for gaming the patent system, extending market exclusivity for years and keeping competitors off the market.
Sen. John Cornyn (R-Texas) pointed at AbbVie, which has patents on Humira that don’t expire until 2034. The drug first came to the market in 2001. Its list price is $60,000 a year.
“Is it your companies position that it should have an exclusive monopoly on medicines for 31 years?” he asked.
“I support drug companies recovering profits based on research and development,” Cornyn continued. “But, at some point, that patent has to end so patients can get access to drugs that are much cheaper.”