Merck, J&J, Bristol Myers Squibb CEOs face Senate drug price hearing

(Left to right) Joaquin Duato, CEO of Johnson & Johnson, Robert Davis, CEO of Merck, and Chris Boerner, CEO of Bristol Myers Squibb, testify before the Senate Committee on Health, Education, Labor and retreats at the Dirksen Senate Office Building in February. 08, 2024 in Washington, DC. The committee held a hearing to investigate the cost of prescription drugs. (Photo by Kevin Dietsch/Getty Images)

Kevin Dietsch | Getty Images News | Getty Images

The CEOs of Johnson & Johnson, Merck And Bristol Myers Squibb defended high U.S. drug prices in the Senate audience Thursday, as the White House and lawmakers on both sides work to rein in high health care costs for Americans.

The push to lower drug prices is one of the few hot-button issues that unites the two major political parties, even though they often support different approaches to cost reduction.

The Senate Health, Education, Labor and Pensions Committee hearing comes at a pivotal time, as the Biden administration begins a long-awaited process to negotiate drug prices directly with manufacturers – which should ease pressure on older people's wallets.

At the hearing, Merck CEO Robert Davis and Bristol Myers Squibb CEO Chris Boerner did not commit to reducing prices of certain drugs in the United States to match those in other high-income countries high, like Canada and Japan.

But they said they would welcome cheaper copycats to the market when the main patents on each of their best-selling drugs expire. Drug manufacturers are known to use different strategies to extend the exclusivity of lucrative drugs.

J&J CEO Joaquin Duato also pledged to lower the price of its immunosuppressant drug Stelara in 2025, when competing drugs are allowed to enter the market.

About 9 million American adults did not take their medications as prescribed in 2021 due to high drug costs, according to a federal study. investigation. Prescription drug prices in the United States are more than 2.5 times higher than those in other high-income countries, another says federal report watch.

The Senate panel said this was especially true for some of the major drugs from the three drugmakers who testified Thursday, including Stelara, Merck's immunotherapy drug Keytruda and Bristol Myers Squibb's blood thinner Eliquis. Both Eliquis and Stelara are among the top 10 drugs subject to Medicare price negotiations.

“The main beneficiary of these high drug prices is the pharmaceutical industry,” Sen. Bernie Sanders, who chairs the Senate Health Committee, said at the hearing.

Robert Davis, CEO of Merck, testifies before the Senate Committee on Health, Education, Labor, and Pensions in the Dirksen Senate Office Building February 8, 2024 in Washington, DC.

Kevin Dietsch | Getty Images News | Getty Images

All three CEOs acknowledged the high cost of health care in the United States, but said their prices reflected the value of their lifesaving drugs to patients and the health care system as a whole. as well as their high investments in research and development.

They also claimed that drugs reach patients much faster in the United States than in other countries, and argued that pharmacy benefit managers – middlemen who negotiate drug discounts on behalf of insurers and other payers – often pocket the savings instead of passing them on to patients.

“Patients are bearing the brunt of a complex American system characterized by rising health care costs and lack of affordability. We need to make the system work better for them,” Boerner said, adding that drugmakers “have a role to play in addressing affordability.” ”

But he added that Bristol Myers Squibb supports policies that “reduce direct patient costs without undermining innovation.” Boerner did not discuss specific policies.

Drugmakers want to protect innovation

Duato noted that J&J prices its drugs to meet its commitment to innovate and develop new medicines for patients, which requires a “massive” investment. J&J has spent nearly $78 billion on research and development since 2016, he said.

Merck, for its part, invested $46 billion in R&D between 2011 and 2023 and plans to spend another $18 billion in the 2030s, Davis noted during his keynote speech.

Meanwhile, Bristol Myers Squibb has spent more than $65 billion on R&D over the past decade, according to Boerner.

Always, a report released Tuesday by the committee, J&J and Bristol Myers Squibb each spent $3.2 billion more on stock buybacks, dividends and executive compensation than on R&D to find new drugs in 2022. Merck, however , spent less on executive compensation than on R&D that year. , the report says.

“I think most Americans would be pretty surprised, given how much the industry talks about research and development, that you actually spend more money, spend money on investors and buy back stock than you would in research and development,” said Senator Chris. Murphy, D-Conn., told CEOs.

But Duato argued that paying dividends is what keeps J&J operational and sustainable, which allows the company to develop drugs in the first place.

CEOs say drugs are getting to Americans faster

The senators highlighted the disparity between drug prices in the United States and other high-income countries. For example, Sanders said the current annual cost of Eliquis is $7,100 in the United States, but only $900 in Canada.

He asked Boerner to commit to lowering the price of Eliquis in the United States compared to the price of the drug in Canada.

Chris Boerner, CEO of Bristol Myers Squibb, testifies before a Senate Health, Education, Labor and Pensions Committee hearing on high drug prices on Capitol Hill in Washington, U.S., 8 February 2024. REUTERS/Leah Milis

Léa Millis | Reuters

But Boerner said he couldn't make that commitment, mainly because the two countries have “different systems that prioritize very different things.” He noted that drugs in Canada are often more difficult to access and take much longer to reach patients in Canada than in the United States.

The Merck CEO offered a similar response after Sanders asked him to commit to lowering the price of Keytruda in the United States to the level of its price in Japan. The panel said the current annual cost of Keytruda is $191,000 in the United States, but significantly lower in Japan, at $44,000.

“I think it's also important to emphasize that access [to drugs] in the United States, it’s faster and more than anywhere else in the world,” Davis said.

He added that Keytruda has many more approved therapeutic uses in the United States, which is part of the reason the drug's price is higher than in other countries.

Keytruda has 39 approved uses or indications for 17 types of cancer tumors in the United States, Davis said. That figure is in the 20s in Europe and even lower in Japan, he added..

But these other indications often give the drug other patents, which allow companies to extend a drug's exclusivity on the market. The senators noted that Merck holds 64 active and 51 pending patents on Keytruda.

Meanwhile, J&J currently has 15 active and 21 pending patents on Stelara. Bristol Myers Squibb holds 18 active patents and two pending patents on Eliquis.

“Drug companies are doing everything they can to keep their prices and profits very high… One of the ways they do this is by filing dozens, if not hundreds, of frivolous patents that lock up their exclusive right to sell their medicine for decades.” said Sen. Maggie Hassan, D-N.H.

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