Soriot urges government action
Sen. Ron Wyden (D-OR) suggested ending the practice of rebates and subsequent legislation that would require drugmakers to reduce list prices by the amount of the rebate. He asked the executives to submit, in writing, whether they would support that law.
In closing, the executives expressed their support for rebate reforms. Olivier Brandicourt, Sanofi CEO, said there is little pharma can do without “major reform” of the drug supply chain. If pharma lowers prices without changes to the rebate system, he said, their drugs could lose placement on formularies that could hurt their sales.
AstraZeneca CEO Pascal Soriot closed by urging government action to reform the pricing system.
“We are in a system that used to be fit for purpose and drove enormous savings, but it’s no longer fit for purpose,” he said. “It is one of those situations where nobody in the system can do anything fix it themselves, the government has to step in and fix it.”
Skepticism about pharma marketing
Sens. Sherrod Brown (D-OH) and Catherine Cortez Masto (D-NV) have brought up pharma marketing. Brown asked whether taxpayers subsidize pharma marketing activities. The executives said this is true, with Merck’s Ken Frazier noting that it is “no different than any other [industry’s] advertising regulation.”
Some lawmakers have proposed ending the tax deduction for DTC drug advertising. Last month, Sens. Jeanne Shaheen (D-NH) and Elizabeth Warren (D-MA) introduced a bill to amend the tax code to remove the deduction for pharma marketing.
Sen. Cortez Masto continued the line of marketing questions by asking whether any companies spend more on R&D than marketing. All seven execs said they do not. She said that pharma claims TV drug ads improve outcomes, but questioned why health outcomes in the U.S. aren’t different than countries where DTC drug advertising is outlawed. Pfizer CEO Albert Bourla said that health outcomes factor in many lifestyle factors.
“So taxpayers subsidize your research, subsidize your marketing, [and] you continue to raise drug list prices on them,” Brown said.
The questioning moves to opioids
Sen. Maggie Hassan (D-NH) brought up opioids and pharma’s role in promoting them to patients. She questioned Johnson & Johnson’s Jennifer Taubert about its previous marketing tactics and whether she thought they were “responsible and appropriate.” Taubert replied that J&J’s Janssen division no longer promotes its opioid products and said, “Everything I have seen leads me to believe that it is appropriate.”
Carper tries to build consensus
Sen. Tom Carper (D-DE) asked the executives to find consensus on three solutions for high drug prices. His proposed solutions echoed their opening-statement talking points: eliminating rebates to PBMs, implementing value-based arrangements, and increasing transparency about how prices are set. All seven executives supported his ideas.
Gonzalez takes it on the chin over Humira sales
AbbVie CEO Richard Gonzalez is taking a lot of the heat because of the success of Humira, the best-selling drug in the world. Sen. Debbie Stabenow (D-MI) asked him to justify the cost of Humira and explain the company’s use of the patent system. Sen. John Cornyn (R-TX) also started his questioning with Humira patents.
Humira is protected from biosimilar competition in the U.S. until 2023. AbbVie has made licensing deals with other pharma companies, including Pfizer, Sandoz, and Mylan, to prevent competition for the drug before then.
“We don’t block any biosimilars. We have now given license to virtually every single biosimilar player, and we’ve done it 10 years before the patent expires. We’ve tried to strike a reasonable balance; we realize it might not be popular, but it is a reasonable balance,” Gonzalez said.
Grassley goes down the line
Sen. Chuck Grassley (R-IA) starts with yes or no questions going down the line. Do you consider the possibility of a congressional hearing when setting prices? Do your companies alone set the list price? Do you support reforming the rebate system?
On international pricing vs. U.S. pricing, Sen. Ron Wyden (D-OR) goes after sky-high Humira sales and the recent launch of the Humira biosimilar in Europe. Wyden asks if the company makes a profit on drugs sold in Germany where prices are lower. CEO Richard Gonzalez says yes. “Our system is built around a variety of pricing around the world; that overall system supports our R&D model. [Otherwise] AbbVie would not be able to invest the level of R&D it invests today,” Gonzalez said.
These talking points sound familiar…
The seven executives made many similar points in their opening statements: reforming Medicare out-of-pocket costs, increasing biosimilar or generic competition, and implementing value-based payment models.
Some outliers: AbbVie CEO Richard Gonzalez and AstraZeneca’s Pascal Soriot mentioned reforming the rebate system. Pfizer’s Albert Bourla suggested passing on rebates to patients rather than middlemen like PBMs or insurers. Merck’s Ken Frazier said coupons should be eliminated. Olivier Brandicourt, Sanofi CEO, took a swipe at the proposal to base U.S. drug prices on an international standard, saying the government should not implement price controls or base prices on other countries.
Wyden starts with fireworks
Sen. Ron Wyden (D-OR) begins by tearing into the pharma companies with phrases like “morally repugnant” and “two-face scheming.” In his opening statement, he anticipated pharma talking points. “The fault is always with somebody else. The health plans are at fault, the pharmacy benefit managers are at fault, the regulators are at fault. What we know for certain is the history of pharma CEOs always say someone else is at fault,” he said. (An example is recent campaigns from drug industry trade group PhRMA that point fingers at other areas of the supply chain, including PBMs and hospitals, for driving up drug prices).
Two CEOs, AbbVie’s Richard Gonzales and AstraZeneca’s Pascal Soriot, mentioned addressing the out-of-pocket costs of Medicare patients in their opening statements. Soriot and Bristol-Myers Squibb CEO Giovanni Caforio also pulled out some common solutions like biosimilar competition and value-based payments.
Johnson & Johnson’s Jennifer Taubert touted her company’s decision to put list prices in DTC advertising as a commitment to transparency. J&J is the only company on the panel that has made this move. The only other drugmaker that has made changes to DTC ads, Eli Lilly, was not invited to this hearing.