Pharma CEOs testify before Senate committee on drug prices — 2/8/2024
High Cost of Prescription Drugs in the United States
- Senator Bernie Sanders opened a Senate Committee hearing on the high cost of prescription drugs in the United States, highlighting the urgent need to address the issue as many Americans struggle to afford their medications.
- Sanders criticized the pharmaceutical industry for prioritizing profits over patients' well-being, citing statistics that show 10 major pharmaceutical companies made over $10 billion in profits in 2022 while spending more on stock buybacks and dividends than on research and development.
- He questioned why pharmaceutical companies charge significantly higher prices for the same drugs in the United States compared to other countries, such as Canada and France.
- Sanders emphasized that the high cost of prescription drugs is not only a personal issue but also a burden on taxpayers and seniors through increased Medicare and Medicaid costs.
- He criticized the pharmaceutical industry for spending billions of dollars on lobbying and campaign contributions to influence the political system and prevent meaningful regulation of drug prices.
- Senator Cassidy followed with an opening statement, acknowledging the importance of addressing the high cost of prescription drugs while ensuring continued innovation in the pharmaceutical industry.
- The hearing focused on publicly attacking private citizens and corporations rather than finding legislative solutions.
- The complexity of the issue requires a comprehensive examination of the entire healthcare system, including insurance benefit design, price transparency, regulatory barriers, and the impact of government discount programs.
- Cherry-picking examples from other countries without considering the full context can be misleading.
- The US healthcare system provides access to a wider range of newly developed drugs compared to countries with public health insurance.
- The hearing's lack of seriousness is evident in the rejection of a request to include an academic expert in drug pricing on the panel.
- The focus on social media clips and hollow messaging undermines public trust in the government's ability to address high drug prices.
Pharmaceutical Industry Response
- Johnson & Johnson's pricing decisions are based on the value of their medicines, patient access, and the need for innovation.
- The company has implemented various measures to support patient affordability, including rebates, discounts, patient assistance programs, and donations of free medicines.
- The high cost of drug development necessitates significant investment in research and development.
- Drug costs in the US have not significantly increased as a percentage of total healthcare costs compared to other developed nations.
- The US spends about 14% of its healthcare budget on drugs, slightly below the average for the rest of the world.
- High copay obligations imposed on patients in the US make it difficult for them to access necessary medications.
- The GAO found that patient copay obligations often exceed the costs that insurers pay for drugs.
- Pharmaceutical companies support proposals to reconcile this inequity and ensure patient access to affordable medications.
- Price caps and controls that exist in other countries can stifle innovation in the biopharmaceutical industry.
- Merk has invested heavily in research and development, leading to advancements in cancer treatment and other diseases.
- The company supports changes to the Medicare Part D program to create an out-of-pocket cap for beneficiaries.
- Merk offers coupons and a patient assistance program to help those who cannot afford their medications.
- The company believes that reforms should delink revenue streams from list prices to ensure that patients benefit from discounts.
- Bristol Myers Squibb is committed to transforming patients' lives through scientific innovation.
- The company has invested heavily in research and development, resulting in novel and transformational medicines.
- The US healthcare system prioritizes patient and physician choice, as well as the broad and rapid availability of cutting-edge medicines.
- BMS supports policies that lower patient out-of-pocket costs without harming innovation.
Specific Examples of High Drug Prices
- The list price of Katuda, a cancer drug, is $191,000 per year in the US, while it can be purchased in Canada for $112,000 and in Japan for $44,000.
- Merck makes a profit selling Katuda in Japan for a quarter of the price it sells in the US.
- The CEO of Merck, Robert Davis, made $52 million in total compensation in 2022.
- Eloquest, a drug to prevent strokes, has a list price of $7,710 per year in the US, while it can be purchased in Canada for $900.
- Bristol Myers Squibb makes a profit selling Eloquest in Canada at 133% of the cost in the US.
- Bristol Myers Squibb spent over $122 billion on stock buybacks in 2022.
- The list price of Stelara, a treatment for ulcerative colitis, is $79,000 per year in the US, while it can be purchased in Spain for $118,000.
- The manufacturing cost of Stelara is less than $15 per year.
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