Ifpharmaceutical companies aren't forthright about their role inincreasing list prices, senators on both sides of the aisle willbecome more combative. (Photo: Shutterstock)

Pharmaceutical executives looking to blame drug-plan middlemen for rising prescriptioncosts at a Senate committee hearing this week will be greetedskeptically by lawmakers, said people familiar with the panel'spreparations.

Senior officials from seven pharmaceutical giants are scheduled to appear before the Senate FinanceCommittee on Tuesday to discuss soaring drug prices, which havebecome a lightning rod in Washington. Drug companies have longpinned climbing prescription costs on rebates that pharmacy-benefitmanagers negotiate when agreeing to cover certain medicines.

Related: Big Pharma spent record $27.5 million on lobbyingin 2018

If pharmaceutical companies aren't forthright about their rolein increasing list prices, senators on both sides of the aisle willbecome more combative, said the people, who weren't authorized tospeak publicly about the preparations. The committee overseesMedicare and Medicaid, giving it jurisdiction over some health-careissues.

Still, pharma executives are expected to press their case thatthe complicated rebate system used by PBMs to ostensibly lower costto patients hasn't proved effective.

“It should result in lower costs for consumers, and it hasn't,”said Adam Gluck, head of U.S. external affairs for the Frenchpharma giant Sanofi. “If we're going to identify solutions forpatients, we need to know how the whole system is working.”

In addition to Sanofi, scheduled to appear are representativesfrom AbbVie Inc., AstraZeneca Plc, Bristol-Myers Squibb Co.,Johnson & Johnson, Merck & Co., Pfizer Inc.

Bearing the brunt of senators' questions does come with oneadvantage: PBMs and other players that drugmakers say share blamewon't be there to defend themselves.

“Pharma executives don't mind having the stage to themselves,”said Brian Rye, a senior health-care analyst at BloombergIntelligence. “It'll give them the opportunity to offer aperspective from a consistent point of view.”

PBMs have drawn of ire of the Trump administration and lawmakersfrom both parties for their arcane system. For example, the benefitmanagers sometimes pay drugstores one price for a treatment whilecharging a higher one to their health-plan clients. The difference,or spread, is used to stabilize drug costs, PBMs say — or add toPBM profits, according to critics.

“PBMs were blindsided to how vulnerable their case actually wasin public opinion,” said Jim Yocum, senior vice president forConnecture, which manages price transparency tools forMedicare.gov. “You won't find many folks speaking up for them amongcommittee members.”

Insulin probe

On Friday, the Senate panel's top two members announced aninvestigation into the price of insulin made by Sanofi, Eli Lilly& Co. and Novo Nordisk A/S.

Chairman Chuck Grassley, an Iowa Republican, and top DemocratRon Wyden, of Oregon, sent letters to the three companies' CEOsasking them how they set prices for the lifesaving products.

“We are concerned that the substantial increases in the price ofinsulin over the past several years will continue their upwarddrive and pose increasingly severe hardships not only on patientsthat require access to the drug in order to stay alive but also onthe taxpayer,” the lawmakers said.

A Sanofi spokeswoman said the company had received the letterand would work with the committee on its request forinformation.

An Eli Lilly spokesman said the company was committed to makingsure people with diabetes have access to insulin.

Novo Nordisk is reviewing the request and is in the process ofresponding. “We recognize that more needs to be done across thehealthcare system for people who are struggling to pay formedicines, and we want to do our part,” said spokesman KenInchausti, noting the company offers co-pay cards and patientassistance programs for eligible diabetics.

A subindex of pharmaceutical stocks on the S&P 500 is up 5.1percent this year so far, underperforming the broader S&P.

Price transparency

Republican members of the committee will probe pharmaceuticalcompanies about price transparency and anticompetitive behavior,while Democrats will bring up ways to empower Medicare in pricenegotiations, the people said.

Democrats will also argue that pharmaceutical companies havecolluded with the Trump administration to make it appear as thoughdrug prices have decreased, as they've continued to raise listprices, said one of the people.

Hundreds of drugs saw list price increases this year, accordingto Elsevier, a health-information analytics company. The averageincrease was around 7.9 percent, shows a Bloomberg analysis of datafor this year through Feb. 5.

Read more: 

• Lowering drug prices: Can California make ithappen?
• Price hikes on name-brand drugs cancel out savingsfrom generics
• New bipartisan bill targets drug prices–andMylan

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