Seven pharmaceutical executives, representing $140 billion in U.S. revenue, testified before the Senate Finance Committee Feb. 26.
During the high-stakes hearing, lawmakers asked top executives to describe and defend their pricing strategies, what keeps them awake at night and their thoughts on various drug reform bills.
Six key takeaways and revealing moments from the nearly 3.5-hour hearing:
1. Pharma pushed the blame to PBMs. Pharma executives repeatedly argued that pharmacy benefit managers play a significant role in high drug prices. The executives said that PBMs have strong negotiating power over drugmakers and often threaten to exclude drugs from formulary lists.
While senators agreed that PBMs likely play a role, the committee’s lead Democrat Sen. Ron Wyden, Ore., said high list prices are dictated by the drugmakers themselves. He accused drugmakers of “stonewalling” by trying to diminish the importance of list prices.
Mr. Wyden told executives that PBMs will “have their day” and the Feb. 26 hearing was about what drugmakers can do to lower prices.
The drug executives also argued the rebate system is a factor in high drug prices. During the hearing, Big Pharma greatly supported HHS’ proposed rule to revamp the rebate system.
2. Drugmakers emerged unscathed. There were no infamous Martin Shkreli moments or remarks like the 1994 hearings in which lawmakers asked tobacco executives to admit their role in causing a public health crisis. Instead, drug executives largely escaped lawmakers’ attempts to shame them for perceived unacceptable behavior.
In one case, all seven executives said they never blocked access to drug samples for generic manufacturers, STAT reports. However, an FDA database shows that Pfizer and AstraZeneca have been accused of doing so by generic drugmakers.
For the most part, the tone of the hearing was respectful, and committee members barely batted an eye when executives shifted the blame to others in the industry, including PBMs and insurers.
3. Another main Big Pharma argument: Medical innovation could be jeopardized. Many of the drug executives warned lawmakers that any “outrageous solutions” to lower drug prices could impede industry innovation, according to a seperate report from The Wall Street Journal. Other executives warned that “quick fixes” are not the answer either.
4. Big Pharma does care about its reputation. Committee Chairman Sen. Chuck Grassley, R-Iowa, asked executives if they considered “negative public opinion” when setting drug prices. All seven responded with a resounding, “yes,” according to The Atlantic. In other words, this means drugmakers consider more than administrative and research and development costs when setting drug prices.
5. Execs admit the U.S. has higher drug prices, for a reason. One major argument lawmakers pointed to was that the U.S. has far higher drug prices than other economically similar countries. Mr. Wyden asked executives if they still made a profit on the drugs they sell in other countries, such as France or Germany. AbbVie CEO Richard Gonzalez admitted that they do still make a profit. After that exchange, Mr. Wyden accused him and AbbVie of “gouging” American consumers. Mr. Gonzalez added that the U.S. has “some of the highest prices in the world” and said “our system is built around a variety of pricing, around the world, but that overall system supports our R&D model,” according to The Atlantic. In other words, if Americans paid similar prices, drugmakers wouldn’t be able to afford to develop new drugs.
6. Drugmakers threw the ball back into lawmaker’s court. “The government has to step up and change the rules,” AstraZeneca CEO Pascal Soriot told legislators, according to The Atlantic. Mr. Soriot’s remark is a rare call for more government regulation. However, it also suggests that drugmakers may not move to change anything on their own, throwing it back to the legislators to make changes.
Date: March 6, 2019