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Pharma CEOs, pressed by Senate panel, refuse to commit to price cuts

The CEOs of three major drugmakers defended the prices they charge U.S. patients in a Senate committee hearing Thursday, claiming Americans gain access to cutting-edge medicines months or years earlier than people in countries that pay a fraction of the U.S. costs.

Senate Health, Education, Labor and Pensions Committee Chairman Bernie Sanders, I-Vt., and his Democratic colleagues pressed Bristol Myers Squibb’s Christopher Boerner, Johnson & Johnson’s Joaquin Duato and Merck & Co.’s Robert Davis to commit to cutting the list prices of top-selling drugs like Eliquis, Stelara and Keytruda to levels in countries like Canada and Japan.

“We are aware of the many important life saving drugs your companies have produced,” Sanders said. “But as all of you know, those drugs are nothing to anybody who cannot afford them.”

The executives — two of whom were threatened with subpoenas before agreeing to appear — declined to commit to price cuts. They cited differences between the largely privately operated U.S. healthcare system and more centralized, government-led systems in other industrialized countries that allow for tighter price regulation but restrict access.

“We have 39 indications for Keytruda across 17 tumor types in the United States,” Davis said. “If you look across Europe, it’s in the 20s, and if you look across Japan, it’s that number or a little bit less. So there is a reason why the prices are different and we need to be careful because we are also seeing in those markets that they are unwilling to support innovation.”

The CEOs expressed support for legislation that would require insurance organizations called pharmacy benefit managers use the rebates they negotiate with drugmakers to reduce patients’ out-of-pocket spending. In some cases, though often not in cancer, these rebates can be significant, and result in lower net prices. But the difference between list and net prices isn’t transparent, and it’s not usually clear how directly those rebates benefit patients.

The executives also backed legislative changes that would permit drugmakers to offer discount cards to Medicare enrollees, which is now illegal.

Senators criticized drugmakers for blocking price competition from generic drugs and biosimilars, citing as examples the number of patents filed on biologic drugs like Stelara and Keytruda, as well as deals that use rebates to block the entry of biosimilars.

“There’s evidence that pharmaceutical companies will do life cycle management to prolong the exclusivity of a drug,” said Sen. Bill Cassidy, R-La., the committee’s senior Republican. “Some argued that that actually defeats innovation, because as opposed to making you profit from innovation you can make profit from life cycle management.”

Sen. Ben Ray Luján, D-N.M., asked the CEOs to pledge to not block entry of generics or biosimilars to the respective drugs in the spotlight when their primary patents expire, which Merck and Bristol Myers agreed to. That question in the case of Bristol Myers Squibb was focused Opdivo, its cancer immunotherapy rival to Keytruda.

For Merck, Davis committed to open competition with any forthcoming biosimilars of intravenous Keytruda. But he didn’t mention the company is trying to develop and launch a subcutaneous, or under-the-skin, version that would likely extend its market advantage beyond the anticipated 2028 expiration of its main patent. Bristol Myers is also working on subcutaneous Opdivo.

Questioned by Luján on settlements that have pushed the launch of biosimilar Stelara to 2025, J&J’s Duato said the price of the drug will be lower when that happens and added that prices net of rebates have dropped ahead of biosimilar competition.