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Senate Finance Committee wants pharma commitment for lower list prices on drugs

End rebates for both Medicare and commercial plans, and they will lower list prices, pharmaceutical executives say.

Susan Morse, Senior Editor

At least three issues on drug pricing came out of a highly-anticipated Senate Finance Committee hearing with seven pharmaceutical  executives on Tuesday.

One is that most of the leaders of the drug companies, including AbbVie, which produces Humira, AstraZeneca, Bristol-Myers Squibb, Janssen of Johnson & Johnson, Merck, Pfizer and Sanofi, are in favor of a Health and Human Services initiative to end rebates negotiated by pharmacy benefit managers and passed onto health plans.

The rebates should be given to consumers at the pharmacy counter, they said.

Second, Senator Ben Cardin summed up the conversation on why drug prices are higher in the United States than in Europe and elsewhere by saying that the manufacturers are underwriting research and development through higher costs to Americans.

AbbVie Chairman and CEO Richard Gonzalez agreed that the United States has some of the highest prices in the world.

"If the market in the United States were to collapse at the lower end of the pricing model, we would not be able to invest in R and D as it does today," Gonzalez said.

The question, said Senator Bill Cassidy was, "How do we support innovation and support patients to afford the innovation?"

Third, the issue for senators comes down to list price.

Asked directly if the United States paid the highest drug prices, the executives said, on average, yes, but it's complicated. List prices are higher, they said, but net prices are more comparable.

Not just one company can lower its list prices, they said. To make this work there must be policy changes because of other factors, such as the PBM middlemen.

Pascal Soriot CEO of AstraZeneca said if the rebates were removed in both Part D and the commercial sector, his company would reduce list prices.

This was echoed by Kenneth Frazier, CEO of Merck and Albert Bourla, CEO of Pfizer. If the rules applying to Medicare were applied to commercial plans, list prices would come down, they said.

"I understand the dissatisfaction in industry," Frazier said. "I would urge you to recognize the system itself is complex. No one company can lower prices without disadvantages."

The price of Humira was raised 6.2 percent, but the company realized only a .9 percent increase, Gonzalez said.

"The part in-between there is rebates that have gone up, and channel mix," he said.

Incentives for the middlemen need to disappear, said Olivier Brandicourt, CEO of Sanofi.

Bourla suggested that the Trump Administration should try through trade negotiations for a better deal on drug pricing.

"In a way it's free-riding on American innovation," Bourla said.

Soriot said, "We are in a system that used to be fit for the purpose that drove savings. The government has to step up and change the rules. The rebates have got to go."

Ranking member Ron Wyden said, "No firm commitments have been made to lower list prices." He requested in writing within ten days, pharma's support to reduce list prices by the amount of the rebates.

Democrats have proposed advance notice of price hikes and for drug manufacturers to make that information public.

Senator Chuck Grassley, chairman of the Senate Committee on Finance,  began the hearing saying it was not about scapegoating, but it was plain the senators wanted "yes" or "no" responses, interrupting the CEOs for a direct answer  when they tried to give longer explanations.

Wyden said, "You're here today because the way you're doing business is unacceptable. AddVie protects Humira like Gollum with his ring."

Senator Maggie Hassan from New Hampshire, a state that has a high rate of opioid overdose deaths, drilled Janssen Pharmaceuticals Executive Vice President Jennifer Taubert on allegations that the Johnson & Johnson company maximized sales for opioids by promoting "pseudo-addiction," the prescribing of more opioids for patients who showed signs of addiction.

Taubert said she wasn't familiar with the term pseudo-addiction but said the company has acted responsibly.


Healthcare groups honed in on the lack of a commitment to lower list prices.

AARP Executive Vice President and Chief Advocacy & Engagement Officer Nancy LeaMond said, "AARP reiterates our call for action on policy solutions that actually lower drug prices instead of simply shifting costs around within the healthcare system. To do that, we must deal directly with the root cause of high drug prices: price gouging by drug companies."

Matt Eyles, president and CEO of America's Health Insurance Plans, "Drug prices are out of control, and we appreciate the bipartisan approach that Congress is taking to get to the root of the problem: the prices set by drug makers, and that they raise year after year, even on products that have been on the market for decades. … But we still heard much more from Big Pharma about casting blame on others for high prices. Drug makers alone set drug prices, they alone increase prices, and they alone could decide to reduce drug prices."

Eyles said the strategy to end rebates will increase premiums for seniors on Medicare by 25 percent and cost taxpayers by nearly $200 billion.

The Campaign for Sustainable Rx Pricing said "Today was Big Pharma's Big Tobacco moment where it became crystal clear the status quo is unacceptable to policymakers and the American people.  It is now incumbent on lawmakers to translate the momentum for change into concrete, market-based solutions to crack down on the anti-competitive and price gouging tactics of Big Pharma, in order to bring down the price of prescription drugs."

Twitter: @SusanJMorse
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