Pharma Catches A Break As Democrats Stumble In Rollout Of Pricing Investigation
Executive Summary
House Oversight Committee plans to grill more companies on pricing later this year, but rushed rollout of reports from a long-running investigation, combined with competing higher profile news events, seemed to dampen the blow of the latest drug pricing scrutiny. Democrats failed to offer any new, unified solutions for their grievances with industry, while Republicans largely rushed to pharma’s defense.
The evening before three drug company executives were set to testify at day two of the House Oversight Committee hearing on pharmaceutical pricing practices 1 October, Democrats were still finishing reports on the companies’ practices. That appeared to be just one of a handful of factors that may have contributed to the committee’s inability to create the mega-attention-grabbing moments that have occurred with past scrutiny of top industry brass like the infamous Oversight Committee Hearings with Martin Shkreli or Mylan Pharmaceuticals Inc. CEO Heather Bresch on EpiPen.
The spotlight on the committee was also diluted by other timing factors. The two-day event kicked off 30 September, when most of the news media’s attention was still on dissecting the spectacle that was the first presidential debate between Donald Trump and Joe Biden the night before, and Congress was scrambling to finish a continuing resolution to keep the government open and another last-ditch attempt to get bipartisan compromise on a COVID-19-relief bill heated up.
(Also see "'Like Water': Pharma Avoids Much Scrutiny In Messy Presidential Debate" - Pink Sheet, 29 Sep, 2020.)
The reports themselves detailed some well-known practices but also some more elusive ones. (See sidebars.)
Plus, the two-day hearing took place long after House Democrats passed their signature drug pricing legislation, HR 3, last December and it’s unclear what they hoped to get out of the latest industry shaming.
There’s little chance any new drug pricing reform happens this year and without a Democratic-controlled Senate (and president) the bill stands little shot at becoming law next year either.
Committee members also didn’t seem to be using the hearing to chart a path forward for Democrats to build on that legislation and push for other price-control policies besides government negotiation in Medicare.
‘Mr. Mallinckrodt’
And there were some awkward flubs. Rep. Norton, D-DC, asked for Amgen, Inc. and Novartis AG to lower the list prices of drugs that have already gone down in cost due to generic competition.
Rep. Jackie Speier, D-CA, asked “Mr. Mallinckrodt,” how much the company spends on marketing, and after the CEO of Mallinckrodt plc, Mark Trudeau, responded she asked “Mr. Trudeau,” the same question.
Rep. Ro Khanna, D-CA, also got himself into a bit of rut when he suggested the primary patent on Enbrel expired in 2010 and Amgen CEO Robert Bradway asked him if he was referring to the patent on the molecule that is Enbrel. Khanna said yes, and then Bradway said that, that patent has not expired. Khanna had to ask Bradway to tell him what patent expired in 2010 – a use patent.
It took quite bit of the wind out of Khanna’s point about how many patents the company had filed on the drug since that 2010 expiry.
Still, Democrats did seem to bring more energy to the second day of the hearing than they did to the first. (Also see "US House Drug Pricing Hearings Start Slow As Pharma Execs Dodge Some Punches" - Pink Sheet, 30 Sep, 2020.)
Rep. John Sarbanes, D-MD, warned there will be “a major restructuring of how the industry operates going forward.”
And yet again some of the most forceful exchanges came from the new and more progressive members of the committee who did the best job of clearly leveraging the information in the committee’s investigations. (Also see "Democrats’ New Wave Leads Attack On Pharma At Drug Pricing Hearing" - Pink Sheet, 30 Sep, 2020.)
Rep. Rashida Tlaib, D-MI, used documents from Novartis to attack copay coupon programs, by showing an analysis that Novartis conducted to figure out when it was best to launch an enhanced copay coupon program in anticipation of generic Gleevec.
“So Novartis expected that for every dollar it put into the enhanced copay program, you know the scam, that it would get back a return on investment of between $5.1 and $8.9. That means for every thousand dollars put into this copay program, you would expect an upwards of nearly a $9,000 in profit,” Talib said.
‘Meticulous, Even Ruthless Focus’
Rep. Katie Porter, D-CA, brought back her whiteboard to show that Amgen spent $28.6bn in stock buybacks in 2017 through 2019, nearly triple what it spent on research and development ($10bn) nearly triple in stock buybacks from 2017 through 2019.
Porter also attacked the company’s large executive compensation and Bradway’s justification for it – that his compensation is based largely on how the company’s stocks perform and “reflects the fact that we’ve been creating value for our shareholders by advancing innovative medicines.”
“I wish you would focus on creating value for sick patients, Mr. Bradway, not just your shareholders,” Porter replied.
Chairman Carolyn Maloney, D-NY, concluded the hearing by emphasizing that the internal documents obtained by the committee showed that “the pricing discussions going on inside these companies have nothing to do with research and development, or promoting new innovation. They show a meticulous, even ruthless focus on squeezing every possible dollar out of the pockets of the American people, and the American taxpayers.”
Maloney said that after the November elections the committee will likely have more hearings as part of their investigation. Other companies the committee has been investigating that didn’t testify this week include AbbVie Inc. (which had been resisting the probe), AstraZeneca PLC, Eli Lilly and Company, Johnson & Johnson, Novo Nordisk A/S, Pfizer Inc. and Sanofi.