U.S. Senate puts pressure on leaders of big pharma companies to lower drug prices

Capitol Hill was in suspense as seven giants of the drug industry made their presence there known in order to discuss the issue concerning drug prices. Lawmakers were there to hear their reasoning for these high prices while mildly criticizing them for their inability to put patients first.

The leaders of these pharmaceutical companies showed no hesitation in agreeing that their prices are high, but they also showed no hesitation in placing the blame elsewhere. They testified that the reason drug prices are so high is because of those running the insurance industry as well the government and pharmacy benefit managers that act as middlemen within the industry. While each pharmaceutical CEO is willing to acknowledge that they play some role in lowering prices, they still stand firm in saying that this problem is much more a group effort.

Ron Wyden, one of the more verbal senators involved in this situation, makes his stance on these defenses clear by saying “Prescription drugs did not become outrageously expensive by accident” and continues to put the pressure on by stating his belief that “Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them.”

The drug industry leaders also make sure to point out that the list price for their drugs are not what they are paid by insurance companies or pharmacy benefit managers. That being said they do still do very well for themselves, as pharmaceutical manufacturers’ profit margins have exceeded 26 percent for the last three years and 22 percent for the past 10 years, at least according to a CVS Health presentation that cited Macrotrends.net.

“We want these rebates, which lower net prices, to benefit patients,” said Olivier Brandicourt, CEO of Sanofi “Unfortunately, under the current system, savings from rebates are not consistently passed through to patients in the form of lower deductibles, co-payments, or coinsurance amounts,”

Sanofi is the company that makes Lantus which is one of the highest priced brands of insulin. Just since 2013, the cost of Lantus has risen from $244 to $431.

Brandicourt summarizes her stance on the situation by stating that “Addressing list prices alone will not be sufficient for solving the problem of patients’ out-of-pocket costs,”

Wyden makes a clear remark to this as well by stating, “I think you and others in the industry are stonewalling on the key issue, which is actually lowering list prices,”, he goes on to further state that “Lowering those list prices is the easiest way for consumers to pay less at the pharmacy counter.”

Wyden is not alone in his feelings as Senator Chuck Grassley comments, “For a patient taking a drug that has no competition, the list price becomes very important.” He goes on to remark, “I’ve heard about people skipping doses of their prescription drugs to make them last until the next paycheck.”

Even when pharmacy benefit managers and insurers have negotiated discounts, there are many cases in which a higher list price will still translate to a higher cost at the pharmacy counter. Since some patients have to pay in full until meeting their deductible and others have payments that are calculated with the list price in mind, high list prices are currently viewed as a major issue to many.

Going forward the Trump administration has proposed requiring companies to include their drugs’ list prices in all their direct-to-consumer advertising, a plan the companies have resisted.

Another major defense they put out was in consideration to the billions they have each placed into research and development. They praised how this money placed into R&D has advanced the medical world greatly in such things as treatments for cancer, hepatitis C, schizophrenia, and autoimmune diseases.

The worldwide chairman of pharmaceuticals for Johnson & Johnson Jennifer Taubert reports that, “Last year, Janssen invested $8.4 billion globally in research and development, making Janssen one of the top research and development investors in any industry anywhere in the world,”. It is important to remember that Johnson & Johnson owns Janssen.

Richard Gonzalez, CEO of AbbVie, also addressed the issue by stating, “If a market the size of the U.S. were to collapse to the lower end of that pricing model, I can just tell you that AbbVie would not be able to invest in the level of R & D that it invests in today,” This was in response to questioning by Wyden about why the prices of their companies drugs are on average 40 percent less in other places outside of the United States such as Germany and France. AbbVie’s drug Humira generates $18 billion each year, and Gonzalez even goes on to acknowledge that they do still make a profit with these lower priced drugs in other countries.

Several of the CEO’s did eventually agree that they would lower list prices if the proposal set forth by the Trump administration to change the current system is finalized. This proposal would make secret rebates negotiated by pharmacy benefit managers illegal and force pharmacy benefit managers to instead negotiate discounts openly and honestly so that even if they haven’t yet met their deductible, people will see the discounts at the pharmacy counter. They also made it clear that this should be for both commercial and government prescription drug plans, and that they do not want the government negotiating drug prices directly through Medicare.

This back and forth between the senators and the pharmaceutical leaders still leaves many questions unanswered, but it gave a clearer view of where each stands when it comes to caring for the patient.

Those who are interested in learning more about this case and others like it can find more information at Jeffrey Newman Law Help Center!