THEY SAID IT: LAWMAKERS EXPOSE BIG PHARMA’S EGREGIOUS PRICE HIKES AND ANTI-COMPETITIVE TACTICS — DEBUNK BLAME GAME AND EXCUSES

Lawmakers Blast Big Pharma Executives During Two-Day Hearing on “Unsustainable Drug Prices,” Demonstrate Bipartisan Commitment to Hold Drug Companies Accountable

This week, the U.S. House Committee on Oversight and Reform held two days of hearings on “Unsustainable Drug Prices.” Executives from brand name drug manufacturers including Bristol Myers Squibb, Amgen and Novartis were grilled for their companies’ egregious price-gouging and anti-competitive behavior. Lawmakers from both sides of the aisle expressed concern with the industry’s pricing practices, put the Big Pharma executives on their heels and expressed their commitment to holding drug companies accountable.

While the Big Pharma executives tried to evade culpability for out-of-control prices using their blame game paybook and shirk responsibility citing bogus research and development excuses, lawmakers stood their ground. Members of the Committee produced internal company documents acquired during an 18-month House Oversight Committee investigation into these brand name drug makers’ tactics that undercut Big Pharma’s claims and exposed their egregious practices.

See what lawmakers had to say about Big Pharma’s egregious practices during the two days of hearings and what the Committee found in its report:

LAWMAKERS ROAST BIG PHARMA, EXPOSE EGREGIOUS PRACTICES

Chairwoman Carolyn Maloney (D-NY): “Our committee’s investigation has revealed deeply troubling facts about how these companies price the drugs we all rely on… first the documents show that these price increases are unsustainable, either for government programs or for patients themselves. The documents we reviewed showed that companies continued to raise prices while raking in record profits and continue to put their products further out of reach for patients in need… We learned that these sky-rocketing prices are simply unsustainable both for government programs and American families. We also learned that claims by drug companies that price increases are necessary for research and development are completely bogus. The internal company documents we obtained show that drug companies hike prices almost entirely for selfish reasons. They do it to meet internal revenue targets or to increase their own bonuses in some cases.”

Representative Michael Cloud (R-TX): “What we do have a problem with is the abuse of the patent system, namely product hopping, adding on patents to extend the introduction of generics, patent evergreening, making small changes to dosages and such that make you gain an extension on your patent, and pay for delay and these are issues that manufacturers do need to take seriously… This is certainly extremely important to all the people we represent and something we know we’ve needed to deal with for quite some time now.”

Representative Katie Porter (D-CA): “[$13.1 million] was your compensation in 2017 for being CEO of Celgene. That’s a lot of money. It’s 200 times the average American’s income, and 360 times what the average senior gets on Social Security. Now of that $13 million, about $2.1 million came from your company hitting yearly earnings targets, and more than half of the bonus formula was based on those targets. Any increase in the price of Revlimid would also increase your bonus by increasing earnings. The Oversight Committee found that if you hadn’t increased the price of Revlimid, you wouldn’t have gotten your bonus.”

Representative Ralph Norman (R-SC): “One thing, as you hear both sides discuss the problems we face with high drug costs, here’s what we agree on: miracle drugs that cure cancer, cure a lot of the illnesses we have, are no good if our patients cannot afford it. Secondly, I agree that the price of insulin as an example, that’s been around 100 years or more, doesn’t require any research and development – that ought to be stopped.”

Rep. Jamie Raskin (D-MD): “Our investigation found that drug companies use anti-competitive tactics to prevent generic competition in order to prop-up profits. Novartis engaged in pay-for-delay, where companies pay off generic competitors to delay their entry into the market. Novartis struck a deal with the first generic competitor to postpone its entry by six months – this is on Gleevec. The generic originally announced it would price its product 30 percent below Gleevec but then they ultimately set the price at only six percent below Gleevec. Experts say these various maneuvers… resulted in $700 million in excess costs to payers alone in a single year.”

Representative Fred Keller (R-PA): “Americans pay too much for their health care and the rising cost of prescription drugs needs to be addressed through bipartisan cooperation. Now, more than ever, we need to ensure that patients – especially those with pre-existing conditions – have access to affordable prescription drugs.”

Representative Jackie Speier (D-CA): “Celgene, in 2017, raised the cost of Revlimid 15 percent in just that one year. That was $3.3 billion in Medicare spending. In that one year, for that one drug… Mr. Alles, you have a remarkable drug, but your price increases have put this drug out of the reach of most Americans.”

Ranking Member James Comer (R-KY): “This is a critical issue for my constituents and indeed all of our constituents, and I’m committed to working to identify and implement reforms that will improve access and affordability to prescription drugs.”

Representative Debbie Wasserman-Schultz (D-FL): “When you have proactive practices that become anti-competitive used to delay generic entry and drive sales, both patients and the U.S. health care system suffer. If companies don’t behave responsibly, Congress must act to rein in this unconscionable behavior. No one should be unable to afford the medication they need to survive and brand name companies, every single day, try to delay as long as possible competition in the market… Who knows how many cancer patients skipped, split or rationed medications because you were able to keep competitors at bay and keep prices high with these anticompetitive tactics?”

KEY TAKEAWAYS FROM THE COMMITTEE REPORT

In conjunction with the hearings, the Committee also released an investigation report highlighting internal company documents that shed light on Big Pharma’s practices that fuel out-of-control prescription drug prices.

Here are key takeaways from the Committee report:

“At The Broadest Level, The Committee’s Investigation Shows That Although Drug Companies Make Products We All Need For Our Health And Well-Being, Their Skyrocketing Price Increases Are Simply Unsustainable Going Forward.” (Carolyn B. Maloney, “CBM Letter To COR Members,” U.S. House Committee On Oversight And Reform, 9/30/20)

“The Committee’s Investigation Also Reveals New Details About The Specific Tactics Drug Companies Are Using To Raise Prices, Maximize Profits, And Suppress Competition Among Other Companies.” (Carolyn B. Maloney, “CBM Letter To COR Members,” U.S. House Committee On Oversight And Reform, 9/30/20)

Celgene/Bristol Myers Squibb – Revlimid

“Since Launching Revlimid In 2005, Celgene Raised The Price Of The Drug 22 Times, From $215 Per Pill To $719 Per Pill. After Bristol Myers Squibb Obtained The Rights To Revlimid Last November, It Raised The Price Of Revlimid Again, To $763 Per Pill. Due To These Price Increases, A Monthly Course Of Revlimid Is Priced At $16,023 Today—More Than Triple The 2005 Price.” (Staff Report, “Drug Pricing Investigation: Celgene And Bristol Myers Squibb – Revlimid,” U.S. House Committee On Oversight And Reform, 9/30/20)

• “Internal Communications Show That Pricing Decisions Made By Celgene Executives—Including Former CEO Mark Alles—Were Driven Almost Exclusively By The Need To Meet Company Revenue Targets And Shareholder Earnings Goals.” (Staff Report, “Drug Pricing Investigation: Celgene And Bristol Myers Squibb – Revlimid,” U.S. House Committee On Oversight And Reform, 9/30/20)
• “Celgene’s Price Increases For Revlimid Led Directly To Higher Bonuses For Its Executives.” (Staff Report, “Drug Pricing Investigation: Celgene And Bristol Myers Squibb – Revlimid,” U.S. House Committee On Oversight And Reform, 9/30/20)

• “Internal Communications Show That Pricing Decisions By Amgen Executives—Including Executive Vice President Anthony Hooper—Were Driven Primarily By The Need To Meet Increasingly Aggressive Revenue Targets.” (Staff Report, “Drug Pricing Investigation: Amgen – Enbrel And Sensipar,” U.S. House Committee On Oversight And Reform, 10/1/20)
• “Amgen’s Price Increases For Enbrel And Sensipar Led To Higher Bonuses For Its Executives.”(Staff Report, “Drug Pricing Investigation: Amgen – Enbrel And Sensipar,” U.S. House Committee On Oversight And Reform, 10/1/20)

“Amgen Leveraged The U.S. Patent System To Limit Biosimilar Competition For Enbrel And Prevented U.S. Patients From Accessing Lower-Priced Versions Of The Drug Available To Patients In Other Countries,” And “Entered Into Settlement Agreements To Delay Entry Of Generic Equivalents” For Sensipar. “Internal strategy documents indicate that Amgen used minor changes to Enbrel’s design— including a new version of the injection device called Enbrel Mini with Autotouch—to drive sales and limit competition. For Sensipar, Amgen entered into settlement agreements to delay entry of generic equivalents. Amgen also attempted to gain additional market exclusivity for Sensipar by showing that it could be used in children, despite knowledge that the FDA was unlikely to grant approval.” (Staff Report, “Drug Pricing Investigation: Amgen – Enbrel And Sensipar,” U.S. House Committee On Oversight And Reform, 10/1/20)

“Internal Data Show That Amgen’s List Price Increases For Enbrel Outpaced Any Rebates Paid.” “From 2015 to 2018, price increases allowed the company to maintain net revenue from Enbrel at levels well above 2014, despite the volume of sales declining and total rebates paid increasing. Internal data reviewed by the Committee show that Amgen’s rebates and discounts for Sensipar  remained relatively steady from 2015 to 2018 (between 23% and 29%), while Amgen raised the price of the drug five times. As a result, Sensipar’s yearly net revenue rose by 34% over this period.” (Staff Report, “Drug Pricing Investigation: Amgen – Enbrel And Sensipar,” U.S. House Committee On Oversight And Reform, 10/1/20)

Novartis – Gleevec

“Since Launching A 400 Mg Tablet Of Gleevec In 2003, Novartis Has Raised The Price Of The Drug 22 Times.” “A yearly course of Gleevec is priced at more than $123,000 today compared to just under $25,000 in 2003, an increase of more than 395%. Novartis raised the price of Gleevec steadily—and at a steeper rate—as it approached its loss of primary patent exclusivity in early 2016. Between 2010 and 2015, Novartis raised the price of Gleevec 12 times. In 2013 alone, the price increased by 20%.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

“Novartis Used Several Anticompetitive Tactics To Delay Generic Competition And Maintain Its Profits.”“First, Novartis undertook regulatory steps to extend its primary base compound patent on Gleevec for 26 months, from May 2013 to July 2015. Novartis also engaged in a practice known as ‘pay for delay,’ where the company struck a deal with the first generic entrant to delay entry of the generic by six months. Although the generic company had initially announced that it would price its generic 30% below the price of Gleevec, the generic company ultimately entered the market at a price just 6.4% lower than Gleevec’s price. Novartis executives hailed this high generic price in an email: “That’s good news.” Experts estimate that these strategies—a six-month delay for generic entry and then a six-month duopoly—resulted in $700 million in excess costs to payers in the one-year period from 2015 to 2016.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

“Novartis’ Internal Data Undermines The Pharmaceutical Industry’s Claims That Price Increases Are The Result Of Increased Rebates, Discounts, And Other Fees Provided To Pharmacy Benefit Managers.” “The average net price per unit of Gleevec—the amount of money the company makes on the drug after all rebates—increased year after year for the 400 mg tablet from 2001 to 2015. This rise ended only after a generic version entered the market in 2016.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

Gleevec’s Price Increases Were Not Justified By R&D. “Novartis reported to the Committee that it had no specific data on R&D expenditures related to Gleevec prior to FDA approval because ‘the Company no longer has access to the records reflecting the very significant Gleevec development spend by the Company prior to FDA approval.’ Novartis explained that, between 2001 and 2019, its Gleevec developmental costs exceeded $700 million— representing a tiny fraction of Gleevec’s net U.S. revenue during the same time period. For each year from 2009 through 2016, Novartis made more than it spent on Gleevec R&D combined during a 19-year period. Public documents also indicate that Gleevec’s preclinical R&D costs were almost entirely funded by grants from the National Cancer Institute and nonprofit organizations.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

“Patient Assistance Programs Allowed Novartis To Reduce Patient Price Sensitivity, And Novartis Used Its Co-Payment Programs To Drive Demand, Particularly After Loss Of Exclusivity.” “In a 2013 document, while acknowledging that research had found an association between higher co-pays and reduced adherence or patient abandonment of a drug, Novartis highlighted: ‘Because oncologic drugs are a necessity for patients, there is less sensitivity to price increases.’ While Novartis externally marketed its co-pay programs as ensuring that ‘every patient who needs Gleevec has access to it,’ internal documents indicate that enhanced patient assistance programs were a crucial piece of Novartis’ strategy to mitigate its loss of exclusivity for Gleevec, encouraging patients to stay on the branded drug even after generic entry. Novartis’ internal strategy documents estimated the potential rate of return of its co-pay assistance program at six months prior to the loss of exclusivity was $8.90 for every dollar invested.” (Staff Report, “Drug Pricing Investigation: Novartis — Gleevec,” U.S. House Committee On Oversight And Reform, 10/1/20)

This hearing demonstrated real bipartisan agreement that Big Pharma must be held accountable, helped expose the egregious price-gouging and anti-competitive practices of the industry and debunked many of the duck-and-dodge tactics used by drug companies to evade responsibility.

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