THEY SAID IT! BIG PHARMA’S PRICE HIKES, PATENT THICKETS AND ADVERTISING SPENDING TAKE CENTER STAGE DURING SENATE HEARING

Lawmakers Make Bipartisan Commitment to Lowering Drug Prices, Holding Drug Companies Accountable

During a hearing on prescription drug prices on Tuesday before the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP) Subcommittee on Primary Health and Retirement Security, lawmakers on both sides of the aisle expressed a commitment to working together to lower drug prices and frustration over the anti-competitive and price-hiking practices of brand name drug companies. In particular, lawmakers and expert witnesses discussed Big Pharma’s egregious pricing practices, tactics that game the patent system to maintain product monopolies and massive spending on direct-to-consumer advertising.

The chairman of the subcommittee, Senator Bernie Sanders (I-VT), kicked off the hearing by highlighting Big Pharma’s control over the U.S. drug pricing system and the need to act to hold the industry accountable:

Senator Bernie Sanders (I-VT), Chairman: “There is an interesting debate among the people of this country about which powerful special interest has the most clout on Capitol Hill… I would give the nod to the pharmaceutical industry – an industry which charges the American people, by far, the highest prices in the world for prescription drugs and has managed to create the situation where they can raise their prices to any level they want, any day of the week… We’ve been talking about this issue for decades. It is time to act.”

Senator Susan Collins (R-ME), the ranking member of the subcommittee, emphasized the opportunity for bipartisan collaboration on solutions to lower prescription drug prices and highlighted the example of Humira in outlining how Big Pharma abuses the patent system to undermine generic and biosimilar competition:

Senator Susan Collins (R-ME), Ranking Member: “[This] is an issue that I hope Democrats and Republicans can find common ground on – and that is improving the affordability of prescription drugs… There are reports that AbbVie, the manufacturer of Humira, filed 247 patent applications for this drug that could have protected the drug for 39 years from any competition from a biosimilar. In fact, the price of Humira in the United States increased by an addition 6.2 percent in January of 2019 to offset price reductions from biosimilar competition overseas.”

Senator Tammy Baldwin (D-WI), who reintroduced the FAIR Drug Pricing Act earlier today, asked witnesses to explain how greater pricing transparency can hold Big Pharma accountable:

Senator Tammy Baldwin (D-WI): “Dr. Kesselheim, why is it important to require manufacturers to publicly justify their price increases, including by accounting for things like research and development costs, net profits attributed to the drug and marketing and advertising spending? And what is the impact of transparency requirements when it comes to the list prices of medications?”

Dr. Aaron Kesselheim, Professor of Medicine, Brigham and Women’s Hospital and Harvard Medical School: “Thank you, Senator. I would say one of the reasons it’s important to require companies to disclose this information to a board or some other means, is first of all to give them the incentive to actually generate information that would justify the price increase. Right now, the companies can raise prices without any justification or without doing any research and to require some kind of disclosure you could actually incentivize companies to generate high quality research information that could then help guide physician and patient choices to provide more usefulness, or prescribing practices.”

Senator Lisa Murkowski (R-AK) asked witnesses whether Big Pharma’s price hikes have any correlation with efficacy, and emphasized the need for more transparency and accountability in the system:

Senator Lisa Murkowski (R-AK): “Dr. Kesselheim, in your experiences with these year-to-year price hikes on prescription drugs, in your view what’s prompting it? Do they usually result from changes or improvements to the drug’s efficacy? Because I think if it was going to improve the drug, we can understand why that might be. Or is it because they are resulting from increased manufacturing costs or R&D?”

Dr. Aaron Kesselheim, Professor of Medicine, Brigham and Women’s Hospital and Harvard Medical School: “It’s a very challenging issue, and no it doesn’t arise from any of those things, it arises because manufacturers have, pharmaceutical companies have investors that they need to maintain their profit margins for and one of the ways that they can do that is, if they have an approved product, is by raising the price on that product year after year.”

Senator Lisa Murkowski (R-AK): “I think we recognize that people want to see some level of transparency and accountability when you see these sometimes-incredible price hikes year over year over year.”

Senator Chris Murphy (D-CT) highlighted major pharmaceutical companies’ massive direct-to-consumer advertising budgets:

Senator Christopher S. Murphy (D-CT): “A 2019 study in the Journal of American Medicine Association looked at 15 years of medical marketing in the U.S. and found that there was a 70 percent increase in healthcare marketing from 1997 to 2016, including a massive increase in DTC advertising and promotion to physicians. Clearly this enormous surge in marketing and advertising provides a benefit to the companies. They wouldn’t do it unless it led to the sale of more product. Clearly it has to be part of the story with respect to the increase in price, if there’s been this incredible surge in marketing and advertising spending… And just to give a sense of how much of the cost may be determinative of the advertising spend of these companies. There’s another study suggesting that for the big pharmaceutical companies as much as 19 cents of every dollar – nearly one-fifth – of all their spending goes to advertising in marketing.”

Senator Roger Marshal (R-KS) emphasized a commitment to bipartisan action to lower prescription drug prices:

Senator Roger Marshall (R-KS): “I just want to emphasize that both sides of the aisle agree on the same goal here – we want to figure out affordable access to all prescriptions for all people.”

And Senator Bob Casey (D-PA) highlighted the burden to his constituents of prescription drug prices that have become out-of-control:

Senator Robert P. Casey, Jr (D-PA): “When many of us go home, one of several big bags of rocks on the shoulders of American families is the cost of prescription drugs. We hear it all the time.”

Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.