Pharma execs grilled over prices

Cost Control

U.S. Senators criticized seven drug industry giants over their industry’s prices and business practices on Capitol Hill this week as the lawmakers criticized the pharmaceutical company leaders for neglecting to put patients before profits, reported Shots Health News from NPR.

Testifying at a hearing of the Senate Finance Committee, the pharma execs acknowledged that their prices are high for many patients, but they blamed the insurance industry, government and middlemen known as pharmacy benefit managers for the problems. While each acknowledged that they have some responsibility for helping to lower drug prices, the execs defended their industry by focusing on their multibillion-dollar investments in research and development and praising advances in treatments for cancer, hepatitis C, schizophrenia and autoimmune diseases.

As Sen. Ron Wyden, D-Ore., said, “Prescription drugs did not become outrageously expensive by accident. Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them.”

According to Jennifer Taubert, worldwide chairman of pharmaceuticals for Johnson & Johnson, which owns Janssen, “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.”

Pharma execs also said that the list prices they set for drugs are not what the fees actually paid by insurance companies or pharmacy benefit managers. These “middlemen” negotiate discounts and rebates on behalf of employers or insurers, which include companies like CVS Caremark and Express Scripts.

Olivier Brandicourt, CEO of Sanofi, which makes Lantus, one of the highest priced brands of insulin, whose list price has risen from $244 to $431 since 2013, said, “We want these rebates, which lower net prices, to benefit patients. 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.”

According to investment research firm SSR Health, the net price of Lantus has declined 28 percent over the last two years because of those discounts and rebates. Thus, Brandcourt added, “Addressing list prices alone will not be sufficient for solving the problem of patients’ out-of-pocket costs.”

In the words of Sen. Chuck Grassley, R-Iowa, the committee’s chairman, “For a patient taking a drug that has no competition, the list price becomes very important. I’ve heard about people skipping doses of their prescription drugs to make them last until the next paycheck.”

Sen. Wyden added, “I think you and others in the industry are stonewalling on the key issue, which is actually lowering list prices. Lowering those list prices is the easiest way for consumers to pay less at the pharmacy counter.”

Some patients are forced to pay the full price for a prescription drug until they meet their deductible. Others have payments that are calculated as a percentage of the list price. Higher list prices mean higher costs at the drug counter, even when pharmacy benefit managers and insurers negotiate discounts.

Some drug company execs support a Trump administration proposal to change the current system in of setting drug prices using secret rebates negotiated by pharmacy benefit managers. Those rebates would become illegal, forcing pharmacy benefit managers to negotiate discounts upfront and giving people discounts at the drug counter without meeting the deductible. Under pressure from Sen. Grassley, several execs said they would lower their list prices if that proposal is finalized and the rule applied to both government and commercial prescription drug plans.

Albert Bourla, CEO of Pfizer, said, “It is our very clear intention that we will not keep a single dollar from these rebates. We will try to move every single penny to the patients.”

 

 

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