(L-R) Johnson & Johnson CEO Joaquin Duato, Merck CEO Robert Davis and Bristol Myers Squibb CEO Chris Boerner testify before the Senate Health, Education, Labor and Pensions Committee in the Office Building of Senator Dirksen on February 08, 2024 in Washington, DC. The Committee held a hearing to investigate the cost of prescription drugs. (Photo by Kevin Dietsch/Getty Images)
Kevin Dietsch | News Getty Images | Getty Images
Its Managing Directors Johnson & Johnson, Merck and Bristol Myers Squibb defended high drug prices in the US in a Senate hearing hearing Thursday, as the White House and lawmakers on both sides of the aisle work to curb high health care costs for Americans.
The push to lower drug prices is one of the rare issues that unites the two major political parties, although they often support different approaches to reducing costs.
The Senate Health, Education, Labor and Pensions Committee hearing comes at a critical time as the Biden administration begins a long-awaited process to negotiate drug prices directly with manufacturers — which is expected to ease pressure on seniors’ wallets .
At the hearing, Merck CEO Robert Davis and Bristol Myers Squibb CEO Chris Boerner did not commit to lowering the prices of some drugs in the US to match lower prices in other high-income countries such as Canada and Japan.
But they said they would welcome cheaper copies on the market when the main patents for each of their best-selling drugs expire. Pharmacists are notorious for using different strategies to extend the exclusivity of profitable drugs.
J&J CEO Joaquin Duato also pledged to lower the price of immunosuppressant drug Stelara in 2025, when competing drugs are allowed to enter the market.
About 9 million American adults did not take their medications as prescribed in 2021 because of high drug costs, according to a federal overview. Prescription drug prices in the US are more than 2.5 times higher than in other high-income countries. federal report shown.
The Senate committee said that was especially true for some of the top drugs from the three pharmacists who testified Thursday, including Stelara, Merck’s immunotherapy drug Keytruda and Bristol Myers Squibb’s blood thinner Eliquis. Eliquis and Stelara are both among the top 10 drugs subject to Medicare price discussions.
“The overwhelming beneficiary of these high drug prices is the pharmaceutical industry,” Sen. Bernie Sanders, who chairs the Senate Health Committee, said during the hearing.
Robert Davis, CEO of Merck, testifies before the Senate Health, Education, Labor and Pensions Committee in the Dirksen Senate Office Building on February 8, 2024 in Washington, DC.
Kevin Dietsch | News Getty Images | Getty Images
The three CEOs acknowledged the high cost of U.S. health care, but said their prices reflect the value of life-saving drugs to patients and the broader health care system. along with their high investment in research and development.
They also argued that drugs reach patients much faster in the U.S. than in other countries, and alleged that pharmacy benefit managers — middlemen who negotiate drug discounts on behalf of insurers and other payers — often make savings instead of passing them on to patients.
“Patients bear the brunt of a complex U.S. system that sees rising health care costs and a lack of affordability. We need to make the system work better for them,” Boerner said, adding that pharmacists “have a role to play in addressing of affordability.”
But he added that Bristol Myers Squibb supports policies that “reduce patient costs without ultimately harming innovation.” Boerner did not point to specific policies.
Duato noted that J&J prices its drugs to meet its commitment to innovate and develop new drugs for patients, which requires a “massive” investment. J&J has spent nearly $78 billion on research and development since 2016, he said.
Merck, for its part, invested $46 billion in R&D between 2011 and 2023 and expects to spend another $18 billion in the 2030s, Davis noted during his opening remarks.
Meanwhile, Bristol Myers Squibb has spent more than $65 billion on R&D over the past decade, according to Boerner.
Yet, a report released Tuesday by the committee said J&J and Bristol Myers Squibb spent $3.2 billion more on stock buybacks, dividends and executive compensation than on R&D to find new drugs in 2022. However, Merck spent less on executive compensation than it did on R&D that year, the report said.
“I think most Americans would be quite surprised, given how much the industry talks about research and development, that you actually spend more money, spend money on investors and buy stocks than you do on research and development,” said Sen. Chris O. Murphy, D-Conn., told the CEOs.
But Duato argued that paying dividends is how J&J stays operational and viable, which allows the company to develop drugs in the first place.
The senators highlighted the disparity between drug prices in the US and other high-income countries. For example, Sanders said the current annual cost of Eliquis is $7,100 in the U.S. but just $900 in Canada.
He asked Boerner to commit to lowering the price of Eliquis in the U.S. to the price of the drug in Canada.
Bristol Myers Squibb CEO Chris Boerner testifies before a Senate Health, Education, Labor and Pensions Committee hearing on high drug prices on Capitol Hill in Washington, U.S., February 8, 2024. REUTERS/Leah Millis
Leah Millis | Reuters
But Boerner said he could not make that commitment, mainly because the two countries have “different systems that prioritize very different things.” He noted that drugs in Canada are often harder to access and take much longer to reach patients in Canada than in the U.S.
Merck’s CEO offered a similar response after Sanders asked him to commit to lowering the price of Keytruda in the U.S. to its price in Japan. The panel said the current annual cost of Keytruda is $191,000 in the US, but significantly lower in Japan, at $44,000.
“I think it’s also important to point out that access [to drugs] in the United States is faster and longer than anywhere in the world,” Davis said.
He added that Keytruda has many more approved therapeutic uses in the US, which is partly why the price of the drug is higher than in other countries.
Keytruda has 39 approved uses or indications for 17 types of cancer in the U.S., Davis said. That number is in the 20s in Europe and even lower in Japan, he added.
But these other indications often give a drug other patents, which allow companies to extend a drug’s market exclusivity. The senators noted that Merck holds 64 active patents and 51 patents pending for Keytruda.
Meanwhile, J&J currently has 15 active patents and 21 patents pending for Stelara. Bristol Myers Squibb holds 18 active patents and two patents pending for Eliquis.
“Pharmaceutical companies do everything they can to keep their prices and profits high… one way companies do this is by filing dozens, even hundreds of frivolous patents that lock in their exclusive right to sell their medicine for decades,” said Sen. Maggie Hassan, DN.H.
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