Drug pricing problems

MARY REICHARD, HOST: Coming up next on The World and Everything in It: Big pharma on Capitol Hill.

You may have had sticker shock over the cost of prescription drugs, and you aren’t alone.

Here’s a comparison you may find interesting. Back in 1960, the average per-capita cost of medication was $90 per year. By 2017, the cost had grown more than 10-fold: $1,000-plus, and those figures are adjusted for inflation.

Now, of course, we have more and better medications treating diseases that would’ve killed you half a century ago.

NICK EICHER, HOST: Right, but here’s where the cost problem is most acute: 1 in every 4 adults say they simply can’t afford the prescriptions their doctors write.

A Kaiser Family Foundation poll found most Americans want the government to get involved.

Last week, CEOs from pharmaceutical companies testified before the Senate Finance Committee about how they set drug prices.

WORLD Radio’s Sarah Schweinsberg has this report.

SARAH SCHWEINSBERG, REPORTER: For more than three hours, Democratic and Republican senators questioned the pharmaceutical leaders from Merck, AbbVie, AstraZeneca, Bristol-Myers Squibb, Pfizer, Sanofi, and Johnson & Johnson.

Throughout the hearing—in rare bipartisan consensus—senator after senator told the executives something’s got to give. Committee chairman Chuck Grassley, a Republican from Iowa, said Big Pharma must stop shifting responsibility for high prices.

GRASSLEY: But like most Americans, we all—I at least, and I think you’ll find most members of Congress—are sick and tired of the blame game.

Senator Ron Wyden, a Democrat from Oregon, accused the companies of greed.

WYDEN: Drug prices are astronomically high because that’s where pharmaceutical companies and their investors want them.

Not surprisingly, the CEO’s denied accusations of greed. They said many factors contribute to high prices, including the amount of money companies spend researching and developing new drugs. Here’s Richard Gonzalez, AbbVie CEO.

GONZALEZ: Our system is built around a variety of pricing around the world. But that overall system supports our R&D model. If a market the size of the United States were to collapse to the lower end of that pricing model, I can just tell you AbbVie would not be able to invest the level of R&D that it invests today.

Johnson & Johnson’s Jennifer Taubert said moving forward the challenge will be maintaining innovation and keeping drug prices from skyrocketing even further.

TAUBERT: The easy diseases have largely been solved. It gets harder as we go after new treatments and new cures for ever more challenging diseases… that we really want to solve.

But Senator Ron Wyden argued the company’s profit margins show it’s possible to pay for R&D and lower list prices.

WYDEN: I think you and others in the industry are stonewalling on the key issue, which is actually lowering list prices. And reducing those list prices are the easiest way for American consumers to pay less at the pharmacy counter.

But the executives insist their companies aren’t solely responsible for drug pricing. Negotiations with insurance companies and middlemen known as pharmacy benefit managers play a big role. And both demand discounts on list prices.

To account for the discounts and recoup drug development costs, the pharmaceutical companies raise list prices.

Merck CEO Kenneth Frazier told the panel the entire pharmaceutical system needs to be addressed before prices can come down.

FRAZIER: I would urge you to recognize that the system itself is complex and it is interdependent, and no one company can unilaterally lower list prices without running into financial and operating disadvantages that make it impossible to do that.

But all of the executives pledged to work with Congress to find a solution. Four expressed support for the proposed CREATES Act. The legislation would make it easier for generic manufacturers to challenge name-brand drugmakers who might be blocking generic competition.

EXECUTIVES : Yes, yes, yes, yes. We are supportive.

The companies also expressed support for a Trump administration regulation that would require them to offer discounts to consumers when they buy their drugs at the pharmacy. That would change the current practice of offering secret rebates to benefit managers in the drug negotiation process.

Pfizer CEO Albert Bourla said his company’s list prices would fall if the administration applied that proposal to both private and government insurance plans.

BOURLA: It is a 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.

But the companies opposed other policies, like allowing Medicare to negotiate prices directly with drug companies

They also opposed the Trump administration’s proposal to base the price that Medicare pays for drugs on the prices consumers pay in other countries. Drugs for diseases like diabetes, cancer, and HIV and AIDS are significantly cheaper overseas.

Sanofi CEO Olivier Brandicourt said both are bad ideas.

BRANDICOURT: The government should not directly control the price of medicines either through federal government price controls or worse, outsourcing price decision to other countries.

Despite the CEOs opposition, the Trump administration still plans to move some of its proposals through the rulemaking process. And lawmakers vowed to continue the dialogue with pharmaceutical companies to find a solution.

Reporting for WORLD Radio, I’m Sarah Schweinsberg.

(AP Photo/Pablo Martinez Monsivais) 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, prepare to testify before the Senate Finance Committee hearing on drug prices, Tuesday, Feb. 26, 2019 on Capitol Hill in Washington. 

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