Senators Chastise Top Pharmaceutical Executives Over High Prescription Drug Costs

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Tuesday's Senate Finance Committee hearing marked the first time lawmakers have called the industry's top executives to account for rising prices, which are a drain on Medicare and Medicaid and a burden to millions of Americans.

The Senate Finance Committee hearing was the second in series titled "Drug Pricing in America: A Prescription for Change".

As executives sat expressionless, Wyden unleashed a harsh critique of their companies and business practices. Americans spent an estimated $360 billion previous year on prescription drugs, and that's expected to increase dramatically in the next decade.

Drawing from their personal experiences, senators on Tuesday chastised drug company executives over the high cost of prescription drugs, as the company officials cautioned that heavy-handed congressional action could jeopardize medical breakthroughs going forward. "Diabetics self ration and endanger lives, but investors are happy", Wyden said.

Humira's price, after rebates, was more than $38,000 per year as of January 2018, according to The New York Times. "It's not the result of a system too complicated for Americans to understand - they're astronomically high because that's where manufacturers want them", he said.

Shortly before the hearing took place, Grassley had appeared on CNBC's Squawk Box, where he criticized the amount of "secrecy" involved with drug pricing.

Merck CEO Kenneth Frazier received $17.6 million in 2017, according to The WSJ. Many told senators that if the Trump administration finalizes a proposal to require rebates paid to insurers to be passed on to consumers at the point of sale, it would lower the initial prices.

In response to the hearing, David Henka, CEO of pharmacy benefit solution company ActiveRADAR, alluded to the challenges of overcoming the problem. One major argument lawmakers pointed to was that the USA has far higher drug prices than other economically similar countries. "We can not allow anyone to hide behind the current complexities to shield the true cost of a drug".

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CEOs from seven of the largest drugmakers, including Pfizer, Merck and AbbVie, are testifying before the Senate Finance Committee.

The executives also nearly uniformly pointed to the billions offered in discounts or paid in rebates to middlemen such as insurers and pharmacy-benefit managers as a problem.

The executives also voiced support for plans to reform the industry-wide system of rebates that pharmacy benefit managers (PBMs) and health insurers receive from drugmakers in exchange for preferential coverage of their medicines.

However, like the participants in the BIO CEO panel, the executives assembled in Washington Tuesday opposed the idea under Medicare Part B to reference drug prices to the prices paid in other countries. Benjamin Cardin, D-Maryland, about why they couldn't charge prices comparable to other developed nations. "Nine of those ten were drug manufacturers". Bob Mendendez, D-New Jersey, and Steve Daines, R-Montana - also brought up the issue of branded drugmakers withholding samples of product for companies to make generics, asking the the executives if any of their companies had ever withheld samples.

The U.S. Department of Health and Human Services (HHS) previous year rolled out a plan to lower drug prices and has introduced several modest proposals to curb medicine costs, but Democrats have said the Trump administration is not doing enough.

The executives blamed insurance companies, saying that they weren't properly passing on available refunds to consumers. Bristol-Myers Squibb is not on the list, but Celgene, which BMS announced it would buy last month for $74 billion, is.

In a tweet on Monday, Grassley said that he hoped that the drug CEOs wouldn't "try to blame everyone but themselves", adding that the hearing was about "the part drug [companies] can do to lower costs for patients+taxpayers".

The executives pointed to their companies' records of developing lifesaving medications, saying profits generated in the lucrative USA market help them fund expensive research and development of future treatments. They were questioned about R&D spending, patent extensions and their own compensation. According to Dr. Aaron Kesselheim, a physician and Harvard professor who recently testified before a House committee on the issue, high drug prices are getting renewed attention because, "a lot of patients may have insurance plans that expose patients to more of a fraction of the pharmaceutical costs due to cost sharing and deductible plans".

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