Healio Special Report: Health Care and Politics
Healio Special Report: Health Care and Politics
February 26, 2019
4 min read

Drug companies grilled on pricing in Senate hearing

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Donald J. Trump
Donald J. Trump

Representatives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Janssen Pharmaceuticals, Merck, Pfizer and Sanofi voiced support for drug rebate reform, value-based program creation, and increasing transparency, biologics and generics awareness to lower U.S. drug prices at a recent Senate Finance Committee hearing.

President Donald J. Trump has called for lower drug prices, and has included these steps among his proposals.


Under the current pricing structure, drug prices are higher because they are then offset by rebates to pharmacy benefit managers.

Sen. Ron Wyman, D-Oregon, said this must change, and challenged the company representatives to play a role in the change.

"I would like an answer in writing [in 10 days] to this question: if rebates go away, will you support a black letter law that requires that you reduce list prices by the amount of the rebate?"

Executives did not respond to Wyman’s question directly, but during other parts of their testimony, agreed the rebate program must be overhauled.

“We clearly support providing the discount at the patient-based level, so this would entail eliminating rebates,” Richard A. Gonzalez, chairman and CEO of AbbVie, said, echoing similar comments made by the other company representatives. 

Gonzalez added that reform to government rebates may also be needed to bring the prices of drugs down, and Janssen Pharmaceuticals executive vice president Jennifer Taubert took her response one step further. 

“We want to be a part of the solution and help the patients access the medications that they so desperately need. Therefore, we strongly support rebate reform that will allow us to lower our list prices that will then give our patients this access,” she said.

Pill Bottles 
Representatives from AbbVie, AstraZeneca, Bristol-Myers Squibb, Janssen Pharmaceuticals, Merck, Pfizer and Sanofi voiced support for drug rebate reform, value-based program creation, and increasing transparency, biologics and generics awareness to lower U.S. drug prices at a recent Senate Finance Committee hearing.

Value-based programs

All the company representatives also expressed support for value-based programs.

Giovanni Caforio, MD, chairman of the board and CEO of Bristol-Myers Squibb, provided further insight to lawmakers on how such programs could benefit patients.

“These models can reduce cost, improve access and adherence, and lead to better patient outcomes,” he said.

Albert Bourla, DVM, PhD, CEO of Pfizer, explained how he would implement that component of Trump’s plan.

“Imagine a system where we get paid based on the number of heart attacks we prevented, instead of the number of pills we sold. If our medicines did not produce good results, we would get paid less,” he said.

Transparency, biologics, generics

During the hearing, Sen. Chuck Grassley, R-Iowa, said the hearing that it may be time to revisit certain components of current drug pricing procedures.

"We should be asking if it is too complex, or if it should be so complex," he said. "We cannot let anyone hide behind the current complexities to shield the true costs of drugs. And we should not turn a blind eye towards industry practices that thwart laws and regulations designed to promote competition and generic drug entries into the marketplace."

Each company representative answered affirmatively when they were asked about making the public more aware of the process that is involved with setting drug prices.

Kenneth C. Frazier, CEO of Merck, said education is a critical factor in advancing the ideas of transparency, biologics and generics.

“If patients really understood what their options were, they would not make the choices they are [regarding higher-priced drugs]. But we have such an opaque system, and that has to change. We have to empower patients to choose the cheapest medication,” Frazier said.   

Caforio said the ramifications of all drug companies being on board with these particular strategies would be of tremendous benefit to patients.

“These elements … would mean significant change and clearly eliminate the concerns that patients have on drug prices today.”

Other responsible parties

The companies at today’s hearing said they were committed to keeping drug prices as low possible but noted that not all of the responsibility for lowering drug prices rests on their shoulders. 

“We as industry have to do everything we can. … There is more we can do to help patients afford their medicines but there are barriers in the way. … The final fixes here will require legislative type changes,” Gonzalez said.

Frazier felt a team approach would work best moving forward.

“I would urge you to consider that the system itself is complex and interdependent. No one company can unilaterally lower list prices without running into financial and operating disadvantages that make lowering drug prices impossible,” he said. “But if we all bring our parties together with a goal of doing what is best for the patient, we can work something out that works best for all Americans.”

Future Senate committee hearings with other professionals involved in setting drug prices will be held to understand the full scope of the drug price equation, according to Grassley.

Other parts of Trump’s plan

Other ways Trump has proposed lowering drug prices during the past 10 months include increasing competition to avert manufacturer gaming of regulatory processes such as Risk Evaluation and Mitigation Strategies; having information regarding drug price increases and lower cost alternatives on the Part D Explanation of Benefits statements; mandating companies list their prices in advertising and removing a gag rule so that pharmacists can tell patients in Medicare Part D when they could pay less out-of-pocket by not using insurance.

Though Johnson and Johnson had announced earlier this year it would soon start putting prices in its advertising, and the gag rule on the pharmacists has since been removed, progress on many of the other components of Trump’s plan is still ongoing.  Stay tuned to Healio for continuing coverage. – by Janel Miller

Disclosures: Healio Primary Care Today was unable to determine relevant financial disclosures prior to publication.