Pharma Testifies Before Congress on Drug Costs: What to Watch
(Bloomberg) -- Top executives from seven of the world’s biggest drug companies will appear before Congress Tuesday to talk about drug costs, a long-awaited session that could kickstart legislation.
The Senate Finance Committee hearing is scheduled to start at 10:15 a.m. in Washington and Bloomberg will be reporting live. You can watch the hearing when it starts here.
Testifying before the committee will be:
- AbbVie Inc. -- CEO Richard Gonzalez
- AstraZeneca Plc -- CEO Pascal Soriot
- Bristol-Myers Squibb Co. -- CEO Giovanni Caforio
- Johnson & Johnson -- Worldwide Chairman of Janssen Pharmaceutical Jennifer Taubert
- Merck & Co. -- CEO Ken Frazier
- Pfizer Inc. -- CEO Albert Bourla
- Sanofi -- CEO Olivier Brandicourt
Here’s what to watch for when the hearing begins:
Drugmakers Blame PBMs
Drugmakers are likely to return to one of their main messages at the hearing: Other parts of the health-care system, such as pharmacy-benefit mangers, insurers, hospitals and doctors all share the blame for high health-care costs. PBMs negotiate prices with drugmakers, who say the rebates and discounts that PBMs get can actually inflate the list price of drugs, padding PBM profits while doing little to reduce patients’ out-of-pocket costs.
PBMs counter that they don’t set prices, drugmakers do. They say that the discounts PBMs negotiate result in lower health-insurance premiums, and that without their efforts consumers would be at the mercy of the pharma industry.
Congress Doesn’t Buy It
Senator Chuck Grassley, the Iowa Republican who heads the Finance Committee, said he’s not interested in hearing from drug executives about why other parts of the health-care supply chain are at fault.
If drugmakers stick to their past messages, it could make for a contentious hearing. Democrats are already likely to be tough on the executives. Republicans grilling them as well could mean a long day.
“We hope to get information from all the executives today on all the information we can how they arrive at list price,” Grassley said during an interview on Bloomberg TV Tuesday ahead of the hearing. “That’s the price that starts everything off at a higher level.”
The PBMs will get their turn, though.
“In less than a month, we’ll probably have a hearing on what the role is of the pharmacy-benefit managers,” Grassley said.
While the Trump administration has laid out a number of steps to reduce prices, such as proposing changing PBM rebates and approving more generic drugs, some of the biggest steps would likely take an act of Congress.
“There’s no legislation right now, but there probably will be legislation,” Grassley said during an interview with Bloomberg TV.
Grassley raised the possibility of a law to address “pay for delay,” a practice by which brand-name drugmakers pay manufacturers of generics to delay the introduction of cheaper versions.
Drugmakers, meanwhile, are likely to push back on policies like a Trump administration proposal to use drug prices in other countries to set a benchmark for what government programs pay.
©2019 Bloomberg L.P.