From l-r., Richard A. Gonzalez , Chairman and Chief Executive Officer AbbVie Inc., Pascal Soriot, Executive Director and Chief Executive Officer AstraZeneca, Giovanni Caforio, M.D. Chairman of the Board and Chief Executive Officer Bristol-Myers Squibb Co., Jennifer Taubert, Executive Vice President, Worldwide Chairman, Janssen Pharmaceuticals Johnson & Johnson, Kenneth C. Frazier, Chairman and Chief Executive Officer Merck & Co., Inc., Albert Bourla, DVM, Ph.D. Chief Executive Office Pfizer, Olivier Brandicourt, M.D. Chief Executive Officer Sanofi, wait to testify before the Senate Finance Committee hearing on drug prices, Tuesday, Feb. 26, 2019 on Capitol Hill in Washington. (AP Photo/Pablo Martinez Monsivais)
Drug makers grilled in the US Senate: Richard Gonzalez, AbbVie executive chairman, left; Pascal Soriot, AstraZeneca chief executive; Giovanni Caforio, Brstol-Myers Squibb executive chairman; Jennifer Taubert, Johnson & Johnson executive vice-president; Kenneth Frazier, Merck executive chairman; Albert Bourla, Pfizer chief executive; and Olivier Brandicourt, Sanofi chief executive © AP

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.

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 development.

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

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.

Copyright The Financial Times Limited 2023. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article