The hearing revealed mixed opinions about who is to
blame for high out-of-pocket patient drug costs and how to fix the issue.
By Sara Heath
February 28,
2019 - Tackling high out-of-pocket patient drug costs is a priority
for healthcare policymakers and pharmaceutical companies alike, although key
stakeholders hardly agree on how to get there.
This and more came to
light during a recent Senate Finance Committee hearing featuring prominent
pharmaceutical company CEOs. Led by Committee chairmen Chuck Grassley (R-IA)
and Ron Wyden (D-OR), this hearing sought to determine how to tackle high drug
costs for patients.
Both Senators and
each of the CEO witnesses agreed that lowering out-of-pocket drug costswill be
essential to supporting patient health.
“America has a
problem with the high cost of prescription medicines,” Grassley said in his
opening remarks.
“Whether it’s about
the EpiPen, insulin, or other prescriptions, in the thousands of letters I’ve
received, Iowans have made clear that high drug prices are hurting them,” he
continued. “I’ve heard about people skipping doses of their prescription drugs
to make them last until the next paycheck. I’m not a doctor, but rationing
one’s medicine doesn’t sound like a safe prescription for health and wellness.
Others have told me about leaving their prescription on the pharmacy counter
because it cost too much.”
But the path to lower
costs will be complicated, as pharmaceutical CEOs put on their defenses and
offered an array of industry-wide solutions to the problem.
“Because we are
tackling medicine’s most challenging problems, solutions do not come easily or
without significant risk,” said AbbVie CEO Richard A. Gonzalez.
The solution lay in
altering Medicare Part D pricing formularies, not drug list prices, Gonzalez
offered. Medicare Part D beneficiaries should be able to purchase insurance to
cover more of their out-of-pocket expenses.
Representatives from
Merck & Co, Inc., Bristol-Myers-Squibb, Pfizer, and Sanofi added that new
rebate systems should pass along better savings to patients. Additionally,
pharmaceutical CEOs recommended value-based reimbursement models, better price transparency, and other
payment reforms to reduce patient financial responsibility.
Some companies added
that list prices for drugs should not change. This revenue supports research
and development (R&D) initiatives, Johnson & Jonson CEO Jennifer
Taubert said. At Johnson & Johnson, R&D spending is 86 percent higher
than spending for sales or marketing, she boasted.
AstraZeneca CEO
Pascal Soriot echoed those sentiments.
“First, we are a
science-led organization, as reflected in our continued investment in R&D
and our success in introducing new treatments,” he said. “Continuing to develop
treatments that deliver long-term benefits to patients and the overall health
of the US population requires society’s commitment to supporting investment in
innovation through purchasing our medicines for the duration of patent
protection at a responsible price that allows for the recoupment of the
investment and risk associated with innovation.”
Giovanni Caforio, MD,
CEO of Bristol-Myers-Squibb came out against current efforts to cap list
prices, including the Trump Administration’s proposed International Pricing Index (IPI),
which would set list prices equal to those seen in other developed countries.
“We do not believe
the US should adopt policies that stifle innovation in other countries, which
could reduce a patient’s access to new medicines,” said Caforio. “Outside of
the US, reimbursement of new medicines can often take more than two years.”
But Wyden and
Grassley countered those arguments, insisting that the list price has a direct
impact on patients.
“For a patient taking
a drug that has no competition, the list price is meaningful,” Grassley
asserted. “For seniors on Part D who are paying co-insurance as a percentage of
list price, the list price is meaningful. For people who have high deductible
plans and pay thousands of dollars towards list price, the list price is
meaningful. For pharmacy benefit managers, providing drugs with a high list
price can be more attractive than providing a less expensive drug. Therefore,
for taxpayers, the list price is meaningful.”
Additionally, the
pair lambasted pharmaceutical companies for their disproportional R&D
spending.
“There is a balance
between incentivizing innovation and keeping prices affordable for consumers
and taxpayers,” Grassley said.
And pharmaceutical
companies are not striking that balance, Wyden said. For example, Bristol-Myers-Squibb
spent $11.5 billion on dividends, stock buybacks, marketing, sales, and
administrative costs. This is about triple the amount it spent on research and
development, Wyden reported.
Other pharmaceutical
companies are increasing their list prices at astronomical rates, he continued.
AbbVie boosted Humira list prices from $19,000 to $38,000 in a 12-month period.
Sanofi’s insulin vials went from about $100 each to just under $300 between
2012 and 2018, and is slated for another increase in 2019, Wyden said.
This all comes as
drug companies make what Wyden suggests are empty promises about freezing drug
costs.
“Pfizer gets first
prize for emptiest gesture on pricing in 2018,” Wyden said. “After stern Trump
tweets last year, Pfizer said it would temporarily freeze prices. But once the
president got his splashy headlines, his gaze turned elsewhere, and Pfizer’s
former CEO told investors it was back to ‘business as normal.’”
Ultimately, the
industry could benefit from some pricing simplification, Grassley stated.
“Without a doubt,
drug pricing is a complex issue. But I think we should all be asking: Should it
be so complex?” Grassley concluded. “We cannot allow anyone to hide behind the
current complexities to shield the true cost of a drug. And, we shouldn’t turn
a blind eye to industry practices that thwart the laws and regulations designed
to promote competition and generic drug entry in the market.”
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