Big Pharma gets heat on drug price trends at Senate hearing

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Drugmakers placed much of the blame for high drug prices on other health-industry players, taking aim at pharmacy benefit managers and health insurers.

In doing so, the companies fell back on a frequently used explanation that’s likely to be challenged by lawmakers. In addition, health industry representatives pushed back on pharmaceutical company contentions, saying they resorted to excuses to misdirect blame for rising drug prices.

Senior executives from seven pharmaceutical giants appearing before the Senate Finance Committee on Tuesday proposed far-reaching changes to how drugs are paid for, including incentives to increase use of cheaper versions of costly biotechnology treatments and more financial help for patients.

In prepared remarks, the executives reiterated a familiar grievance—that pharmacy-benefit managers and health insurers retain negotiated discounts on prescription drugs for themselves rather than pass them to patients, according to written testimony submitted to the committee.

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Senator Chuck Grassley, the Iowa Republican who chairs the panel, warned drugmakers that he wasn’t interested in hearing about why companies other than pharmaceutical manufacturers were responsible for high drug prices.

“We don’t want these executives to point fingers at someone else,” Grassley said in an interview with Bloomberg TV on Tuesday. In a written version of his opening statement, the chairman said now is the “time for solutions.”

The executives offered other suggestions they say could lower drug costs. Merck Chief Executive Officer Kenneth Frazier said the company would support eliminating the use of some coupons brand-name drugmakers use to keep patients from switching to generics.

Frazier and Sanofi CEO Olivier Brandicourt also backed a bill that would prohibit brand-name drugmakers from thwarting generic-drug development by withholding samples necessary for testing to gain Food and Drug Administration approval. The measure is one of Grassley’s legislative priorities.

Sanofi, under fire from the committee for soaring insulin prices, said the average net price after rebates and discounts of its most popular insulin, Lantus, has fallen more than 30 percent since 2012. At the same time, average out-of-pocket costs, such as co-pays and deductibles, for patients with commercial insurance and Medicare have risen 60 percent.

“In this case, not only are discounts apparently not being passed on to patients, but patients are in fact being asked to pay more when PBMs and health plans are paying less for the medicine,” Brandicourt said in written testimony. “This situation defies logic and should not happen.”

Pfizer CEO Albert Bourla estimated that if rebates were passed on to patients, seniors in Medicare would save on average $270 a year. Other executives echoed that sentiment and pushed for Medicare to include caps on out-of-pocket spending.

Bourla said if the same requirement on passing rebates on to patients were applied to the commercial insurance market, Pfizer would commit to lowering list prices.

However, executives at America’s Health Insurance Plans, the trade association representing healthcare payer organizations, scoffed at those contentions.

“We still heard much more from Big Pharma about casting blame on others for high prices. Drugmakers alone set drug prices, they alone increase prices, and they alone could decide to reduce drug prices,” said Matt Eyles, president and CEO of AHIP.

“Higher drug prices mean higher premiums and higher expenses for everyone,” Eyles added. That’s why health insurance providers and our PBM partners are Americans’ bargaining power—negotiating with Big Pharma for lower costs. Big Pharma must be held accountable and clearly explain why prices are so high.”

The pharma companies also suggested tying prices to how well a drug works, a proposal the industry has pushed for several years with limited success. They also offered more support for biosimilars, generic versions of newer and more expensive complex biologic drugs. Many brand-name companies see the potential to make money in biosimilars, which are expected to have higher prices than conventional copycat medicines.

More than a week ago, Grassley told reporters he wants to hear how drugmakers might strike a deal rather than continuing to oppose price-cutting measures.

Democrats have unsuccessfully sought to allow the U.S. government to negotiate drug prices under Medicare, the health program for the elderly and disabled. Republicans have opposed such a move, but President Donald Trump’s administration last year proposed basing what Medicare pays for some drugs on the lower prices paid by other countries with national health systems.