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WASHINGTON (Reuters) – U.S. Senate Democrats grilled three top pharmaceutical executives over the high cost of prescription drugs on Thursday but failed to extract any commitments from them to lower prices.
Bristol Myers (NYSE:BMY) Squibb CEO Chris Boerner, Merck CEO Robert Davis, and Johnson & Johnson (NYSE:JNJ) CEO Joaquin Duato appeared before the Senate Committee on Health, Education, Labor, and Pensions (HELP), with Davis and Duato only agreeing to do so last week in response to a subpoena threat.
During the hearing, presided over by HELP Committee Chairman Senator Bernie Sanders, the three executives declined to commit to lowering their U.S. prices to match what they charge in other countries like Canada.
“In Canada, medicines are generally made less available, and it takes oftentimes considerably longer for those medicines to be available on average,” Boerner said.
Countries like Canada and Japan, where drug prices are lower, have higher life expectancies than in the United States in spite of this reduced access, Sanders countered.
The CEOs acknowledged that they still make profits in countries where they charge far less for their products than they do in the United States.
The hearing comes as President Joe Biden’s administration implements the first drug price negotiation program for the government’s Medicare health plan for those age 65 and older under the Inflation Reduction Act. Negotiations started this year on the first 10 prescription drugs selected for prices that will not take effect until 2026.
The pharmaceutical industry lobbied hard against the provision and several major companies, including Bristol Myers, Merck, and J&J, sued the government over it after its passage.
The executives blamed higher prices on pharmacy benefit managers (PBMs), middlemen who negotiate payment for prescription medicines with drugmakers on behalf of their employer and health insurer clients.
Sanders said the three companies made billions of dollars in profits and spent massive chunks of it on stock buybacks and dividends, far more than what they spent on research and development
“Not a single dollar of this revenue is going to PBMs,” he said.
PBMs have come under scrutiny, with the Federal Trade Commission (FTC) investigating their role in rising healthcare costs and lawmakers proposing several bills that would require them to make their fee structures public.
The industry has spent over $8.5 billion over the past 25 years on lobbying both Democrats and Republicans, Sanders said, and more than $745 million on campaign contributions.
A Reuters tally found that PBMs ramped up their lobbying spending in 2023, but still shelled not quite half of what the pharmaceutical industry spent.
