[Ip-health] FT: US drugmakers defend pricing under fire in Senate

Thiru Balasubramaniam thiru at keionline.org
Tue Feb 26 18:31:10 PST 2019



Drug prices
US drugmakers defend pricing under fire in Senate
Some companies pledge to lower costs if government reforms rebate system

Hannah Kuchler in San Francisco

US senators accused large pharmaceuticals groups of “stonewalling” and
“finger-pointing” rather than taking responsibility for high drug prices,
as some companies pledged to lower list prices for medicines if the federal
government reforms the rebate system.

In a Senate hearing on Tuesday, seven executives from some of the world’s
largest pharma groups said they backed the Trump administration’s proposal
to remove rebates from the healthcare system. The drugmakers blame pharmacy
benefit managers, which administer drugs for insurance plans, of keeping
the cash rather than passing on savings to patients.

Chuck Grassley, Republican chair of the Senate finance committee, opened
the hearing by saying it was not about “scapegoating”. “We’ve all seen the
finger pointing. Every link in the supply chain has gotten skilled at
finger-pointing,” he said. Senator Grassley added that he understood that
drug pricing was a complex issue. “But we have to ask whether it’s too
complex or if it should be so complex,” he said.

Ron Wyden, the Democratic ranking member of the committee, said drugs did
not become “outrageously expensive by accident”. “Drug prices are
astronomically high because that’s where pharmaceutical companies and their
investors want them,” he said.

Senator Wyden added that it was “morally repugnant” that some patients had
to choose between drugs and food, while companies treated them as “ATMs”.
“I think you and others in the industry are stonewalling on the key issue:
reducing list prices,” he said.

If you can turn a profit in a country with dramatically lower prices . . .
how is that not gouging the American consumer with high prices?

Ron Wyden, the Democratic ranking member of the Senate finance committee
Albert Bourla, the new chief executive of Pfizer, said the company would
“not keep a single dollar” from the rebate reforms, while Pascal Soriot,
chief executive of AstraZeneca, said removing the rebates would “definitely
reduce list prices”.

But others stopped short of a complete endorsement. Jennifer Taubert,
Johnson & Johnson’s executive vice-president, said she would like to ensure
additional fees were not added to compensate for the loss of rebates.
Olivier Brandicourt, chief executive of Sanofi, said that lower list prices
must be linked to better access and affordability for the public. Kenneth
Frazier, chief executive of Merck, said prices would come down if the
system was changed so that no one company faced a disadvantage.

Mr Frazier said no company could “unilaterally lower list prices”, because
they would be punished financially by the supply chain, but everyone needed
to work to change the system. “We have a system where the poorest and the
sickest are subsidising others,” he said.

The seven pharmaceuticals companies backed legislation to try to ensure
that generic drugmakers have access to the samples they need to make the
equivalent unbranded drugs.

But the pharma executives pushed back against a proposal from the Trump
administration to peg US drug prices to an international price index, based
on the prices paid by a selection of developed countries. They argued US
patients often had access to innovative medicines long before those in
other countries and the companies relied on US prices to fund research and

Mr Bourla accused other developed countries of “free riding on American

The drugmakers were split on a Democratic proposal that would force them to
justify price increases before they raised the list price significantly,
with Pfizer, Merck and Sanofi supporting it — but J&J saying it could cause
problems in the supply chain.

Richard González, AbbVie’s chief executive, was forced to defend the
company’s pricing of Humira, its blockbuster arthritis drug, and its
efforts to keep the drug exclusive, rather than allowing biosimilars, the
equivalent of generic drugs, to be sold in the US.

Senator Wyden said the price of Humira had doubled in six years and accused
AbbVie of guarding the exclusivity of Humira “like Gollum with his ring”.
He pointed out that a portion of Mr González’s bonus had been directly tied
to sales of Humira.

Biosimilars for Humira are now available in Europe, but will not be
available in the US until 2023. Senator Wyden accused AbbVie of “hosing the
American consumer and giving breaks to people overseas”.

Asked whether AbbVie makes a profit on drugs that it sells in Germany and
France, Mr González said it does. Senator Wyden responded: “If you can turn
a profit in a country with dramatically lower prices . . . how is that not
gouging the American consumer with high prices?”

Mr González said the price of Humira in the US played an “important role”
in funding the company’s R&D. He added that the company had issued licences
to several biosimilar makers to produce Humira.

Shares in AbbVie edged up slightly in midday trading in New York in an
overall rising market, adding 0.4 per cent to $80.63.

Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International
41 22 791 6727
thiru at keionline.org

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