DOSE OF REALITY: BIG PHARMA CEOS FACE A RECKONING FROM LAWMAKERS AND EXPERTS ON ANTI-COMPETITIVE PRACTICES AND PRICE GOUGING

Patent Abuse Designed to Extend Monopolies, Block Competition and Keep Prices High Takes Center Stage at HELP Committee Hearing

On Thursday, the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) held a hearing with the CEOs of three Big Pharma giants: Johnson & Johnson, Merck and Bristol Myers Squibb. During the hearing, lawmakers, on both sides of the aisle, and expert witnesses highlighted the pharmaceutical industry’s egregious pricing practices and anti-competitive tactics.

The Big Pharma CEOs even reminded everyone drug companies alone set the price of the prescription drugs in their portfolios and admitted brand name drug makers craft patent strategies to block competition and maximize profits.

“We set the list price.”

– Chris Boerner, Chief Executive Officer, Bristol Myers Squibb

Get a Dose of Reality on Big Pharma’s egregious practices and the importance of holding brand name drug companies accountable from the hearing here:

HELP Committee Chairman Bernie Sanders (I-VT) began the hearing by pointing out that Big Pharma companies routinely increase prices above the rate of inflation.

U.S. Senate HELP Committee Chairman Bernie Sanders (I-VT): “Let’s be clear, Johnson & Johnson, Merck and Bristol Myers Squibb are not just charging higher prices in the United States compared to other countries, they are also charging Americans much higher prices today than they did in the past, even accounting for inflation. From 2004 to 2008, the median price of innovative new drugs sold by these three companies was just $14,000, inflation accounted. From 2019 to 2023, where we are today, the median price of new drugs sold by these three companies was $238,000. In other words, Americans are forced to pay higher and higher prices for the drugs they need to survive.”

U.S. Senator Maggie Hassan (D-NH) put the Big Pharma CEOs on the spot for specific examples of egregious patent abuse on blockbuster drugs including Keytruda (Merck), Eliquis (Bristol Myers Squibb) and Stelara (Johnson & Johnson).

Senator Maggie Hassan (D-NH): “While families in New Hampshire and across the country struggle to afford these lifesaving medications, pharmaceutical companies are doing everything that they can to keep their prices and their profits sky high. And I know you’ve all talked about that not being the case. But let’s just look at one thing here. One way that companies do this is by filing dozens, even hundreds of frivolous patents that lock in their exclusive right to sell their drug for decades. By playing games like this with the patent system, companies block low-cost alternatives, like generics from coming to market. Mr. Davis, the list price for Merck’s cancer medication, Keytruda, is as we talked about, $190,000 per you per year. Can you tell us how many patents have been filed on this medication?”

Robert Davis, Chief Executive Officer, Merck: “I don’t have the exact number…”

Senator Maggie Hassan (D-NH): “Well, I don’t think it would surprise you to learn that I do know how many patents you currently have. It’s 168.”

Senator Maggie Hassan (D-NH): “Mr. Boerner, let’s turn to the BMS’ [Bristol Myers Squibb] drug Eliquis. The list price, as we’ve talked about, is $7,100 per year. How many generics of this drug could a patient in the United States get at the pharmacy today?”

Chris Boerner, Chief Executive Officer, Bristol Myers Squibb: “Senator, in the U.S. there are not yet generics available.”

Senator Maggie Hassan (D-NH): “Right. There are zero generic versions of Eliquis available to patients even though the original patents on the medication began to sunset in 2019. Because your company has sued to block two approved generics from the U.S. market until 2028 at the earliest. Isn’t that, right?”

Chris Boerner, Chief Executive Officer, Bristol Myers Squibb: “Senator, we have allowed for generic entry in 2028. That’s correct.”

Senator Maggie Hassan (D-NH): “Right. So, we have two generics ready to go. Your original patent is well past expired, but you still are actively trying to prevent generics from coming to market.”

Senator Maggie Hassan (D-NH): “Mr. Duato, the list price of Johnson & Johnson’s autoimmune arthritis medication Stelara is nearly $80,000 annually. Similar to Eliquis, there are currently zero low-cost biosimilar versions of Stelara available for U.S. patients. There are zero biosimilars for Stelara available in the United States today, because Johnson & Johnson has also sued to delay the launch of a low-cost biosimilar drug. So, we need, you know, you have all talked about the need to have speed of access…getting drugs to market, but then you are actively working to block the less expensive biosimilars and generics from coming to market.”

Senator Mike Braun (R-IN) grilled Merck’s CEO Robert Davis on how the market for prescription drugs, and particularly the pharmaceutical industry’s patent tactics, are not indicative of a free marketplace.

Senator Mike Braun (R-IN): “What would your definition of a free market be?”

Robert Davis, Chief Executive Officer, Merck: “One where you are able to bring goods and if those goods bring value and the system sees value in them, you’re able to bring those at a value you think is fair and reasonable and negotiate with the other side. And a world where you have free competition.”

Senator Mike Braun (R-IN): “So right there you said negotiate. Most free markets are typified by this. And I’d like y’all to listen to this because I think the big challenge, if I were in your seat, running your companies, is that it’s not a free market. A free market means you’ve got a lot of choices, you’ve got vibrant competition, no barriers to entry, and you’ve got an engaged consumer. Now, do any of those apply to your business?”

Senator Ben Ray Luján (D-NM) asked the CEOs to commit to not block competition on blockbuster drugs beyond their primary patents, which the Big Pharma execs, of course, would not do.

Senator Ben Ray Luján (D-NM): “Mr. Boerner, yes or no, will you commit to not blocking other drug makers from entering the market when your primary patent on Eliquis expires?”

Chris Boerner, Chief Executive Officer, Bristol Myers Squibb: “Senator, we have a number of patents on Eliquis, and we have certainly anticipated that when the patents that are most relevant for that product expire, we will have generic competition, in this case not biosimilar but generic competition, and that would be around 2028.”

Senator Ben Ray Luján (D-NM): “When the primary patent expires on Eliquis, will you commit to not blocking other drugmakers from entering the market?”

Chris Boerner, Chief Executive Officer, Bristol Myers Squibb: “Senator, I’m not a patent attorney so I’m not -”

Senator Ben Ray Luján (D-NM): “You’re the CEO.”

During the second half of the panel, several drug pricing experts spoke about the pharmaceutical industry’s abuse of the patent system and its cost to U.S. patients and taxpayers.

Tahir Amin, LL.B., Chief Executive Officer, I-MAK: “[The] root cause is how the pharmaceutical industry manipulates the patent system to lengthen patent protection and its market monopoly in order to block competition, all while increasing prices.”

Tahir Amin, LL.B., Chief Executive Officer, I-MAK: “Now prescription drug spending on retail and non-retail drugs is poised to grow 63 percent this decade to $917 billion, and branded prescription drugs, which are under patent protection, accounted for 84 percent of that spending. These price hikes correspond with a dramatic increase in patenting activity in the pharmaceutical sector.”

Tahir Amin, LL.B., Chief Executive Officer, I-MAK: “Now, we have analyzed the top 10 selling drugs in the United States, and we have found a total of 1,429 patent applications have been filed as of 2022. 741 patents have been granted on these drugs. On average, that is more than 140 patent applications filed per drug and 74 patents granted per drug. And 66 percent of those patents are filed after the drug is approved by the FDA.”

Tahir Amin, LL.B., Chief Executive Officer, I-MAK: “Keytruda actually represents 47 percent of Merck’s total pharmaceutical revenue. Now as of June 2022, we’ve counted 180 patent applications, of which 78 are granted. They have patent protection at least until 2039, which is in total 37 years of patent protection since they found that first patent, which is 2002. You’re supposed to get a patent for 20 years, remember? Market and media outlets are currently reporting that we should see biosimilar competition in 2028. […] I put myself on record here today we will not see biosimilar competition until 2034. They will litigate the hell out of it. And they will use every cent that they can to kind of not leave $100 billion on the table. Which is what those patents are worth to them.”

The hearing provided a reminder that Big Pharma’s egregious anti-competitive and pricing practices are the root cause of out-of-control drug prices and emphasized the urgency for policymakers to focus on bipartisan, market-based solutions to hold brand name drug companies accountable to lower prices for patients.

Read more on Big Pharma’s patent abuse HERE.

Read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.