United States: Finger-Pointing But Few Fireworks At Senate Hearing On Drug Prices

Amid finger-pointing but few real fireworks, the seven pharmaceutical executives testifying before the Senate Finance Committee today offered lawmakers a spirited defense of the industry but also substantive policy concessions to address drug prices. They avoided gaffes and left the industry in no worse a political position than before the hearing.

Democrats predictably were unsatisfied, and several Republicans appeared open to considering changes to patents, Medicare Part D and other policies. While the executives largely escaped the hearing without adding to the industry's challenges on the Hill, pharma remains in bipartisan lawmakers' legislative crosshairs. The industry hasn't faced this level of legislative risk since 2009, when Democrats controlled the Congress and the White House and began to push what became known as the Affordable Care Act.

The pharma executives sought to strike a balance between working constructively to address senators' policy concerns over drug prices and emphasizing their role in creating innovative treatments and highlighting the role of other stakeholders in the drug supply chain.

Chairman Chuck Grassley, R-Iowa, acknowledged the complexity of the system but said drug list prices contribute to patients' overall rising drug costs. He also said he was not interested in finger-pointing or a blame game – a striking contrast to Sen. Ron Wyden, D-Ore., who called out companies one by one on their "empty promises" and "flip-flopping."

The executives acknowledged the current system is unsustainable and pledged to work with the committee on constructive solutions – while highlighting their commitment to ongoing research and development, and the benefits their medicines provide to the overall system.

Democrats on the panel attacked the industry for what they said was putting profits ahead of patients, seeking to portray companies as raising prices and blocking competition at the expense of consumers and taxpayers. A significant focus was on the lower cost for drugs in Europe and elsewhere compared with the United States. Witness acknowledged this but argued that prices are dictated by foreign governments. If companies were forced to sell drugs in a market the size of the United States at the same prices they sell drugs in European countries, the manufacturers said, they couldn't invest the revenue they currently do in research and development.

Although the hearing featured many well-trodden talking points, especially on the role that pharmacy benefit managers and insurers play in increasing costs, the executives did offer substantive suggestions, including on proposals the industry uniformly rejected in the past. At least four of the companies voiced support for CREATES legislation aimed at preventing companies from using Food and Drug Administration REMS safety programs to block generic competition – though most suggested changes were necessary to the current bill. Witnesses also largely supported proposals to require notice of significant price increases.

Senators did allow the executives to elaborate on the impact of rebates and the complexity of the market on patients' cost at the pharmacy counter. The panel supported the Trump administration's recent proposal targeting those rebates. One witness explained that in the past, companies' goal in setting prices was to have lower co-pays for patients; today, the goal is to pay the largest rebate, creating an incentive to increase list prices, to the detriment of patients.

The hearing was also noteworthy for Republican senators' willingness to engage with proposals targeting the industry, including CREATES and other perceived patent abuses. In one noteworthy exchange, Sen. John Cornyn, R-Texas, pressed AbbVie CEO Richard Gonzalez on the company's lengthy patent protection for Humira. As Wyden chimed in supportively, Cornyn pledged to work in the Judiciary Committee to ensure companies cannot continually extend patent protections.

Overall, those anticipating a hearing full of fireworks and tense exchanges would have been disappointed. The industry witnesses gave ground on certain issues but stood up for their companies' role in innovation and patient health and against more drastic proposals, such as forcing U.S. drug prices to be based on what those in other countries pay. When criticisms did arise, the executives avoided confrontational exchanges. Senators did ask pointed questions and at times put the executives on the defensive, but in many cases, they also allowed them to provide substantive, constructive answers without interruption throughout the hearing.

Chairman Grassley's opening statement is here. Sen. Wyden's opening statement is here.

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