Pharmaceutical executives looking to blame drug-plan middlemen for rising prescription costs at a Senate committee hearing this week will be greeted skeptically by lawmakers, said people familiar with the panel's preparations.
Senior officials from seven pharmaceutical giants are scheduled to appear before the Senate Finance Committee on Tuesday to discuss soaring drug prices, which have become a lightning rod in Washington. Drug companies have long pinned climbing prescription costs on rebates that pharmacy-benefit managers negotiate when agreeing to cover certain medicines.
If pharmaceutical companies aren't forthright about their role in increasing list prices, senators on both sides of the aisle will become more combative, said the people, who weren't authorized to speak publicly about the preparations. The committee oversees Medicare and Medicaid, giving it jurisdiction over some health-care issues.
Still, pharma executives are expected to press their case that the complicated rebate system used by PBMs to ostensibly lower cost to 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 French pharma giant Sanofi. “If we're going to identify solutions for patients, we need to know how the whole system is working.”
In addition to Sanofi, scheduled to appear are representatives from AbbVie Inc., AstraZeneca Plc, Bristol-Myers Squibb Co., Johnson & Johnson, Merck & Co., Pfizer Inc.
Bearing the brunt of senators' questions does come with one advantage: PBMs and other players that drugmakers say share blame won'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 Bloomberg Intelligence. “It'll give them the opportunity to offer a perspective from a consistent point of view.”
PBMs have drawn of ire of the Trump administration and lawmakers from both parties for their arcane system. For example, the benefit managers sometimes pay drugstores one price for a treatment while charging a higher one to their health-plan clients. The difference, or spread, is used to stabilize drug costs, PBMs say — or add to PBM profits, according to critics.
“PBMs were blindsided to how vulnerable their case actually was in public opinion,” said Jim Yocum, senior vice president for Connecture, which manages price transparency tools for Medicare.gov. “You won't find many folks speaking up for them among committee members.”
|Insulin probe
On Friday, the Senate panel's top two members announced an investigation into the price of insulin made by Sanofi, Eli Lilly & Co. and Novo Nordisk A/S.
Chairman Chuck Grassley, an Iowa Republican, and top Democrat Ron Wyden, of Oregon, sent letters to the three companies' CEOs asking them how they set prices for the lifesaving products.
“We are concerned that the substantial increases in the price of insulin over the past several years will continue their upward drive and pose increasingly severe hardships not only on patients that require access to the drug in order to stay alive but also on the taxpayer,” the lawmakers said.
A Sanofi spokeswoman said the company had received the letter and would work with the committee on its request for information.
An Eli Lilly spokesman said the company was committed to making sure people with diabetes have access to insulin.
Novo Nordisk is reviewing the request and is in the process of responding. “We recognize that more needs to be done across the healthcare system for people who are struggling to pay for medicines, and we want to do our part,” said spokesman Ken Inchausti, noting the company offers co-pay cards and patient assistance programs for eligible diabetics.
A subindex of pharmaceutical stocks on the S&P 500 is up 5.1 percent this year so far, underperforming the broader S&P.
|Price transparency
Republican members of the committee will probe pharmaceutical companies about price transparency and anticompetitive behavior, while Democrats will bring up ways to empower Medicare in price negotiations, the people said.
Democrats will also argue that pharmaceutical companies have colluded with the Trump administration to make it appear as though drug prices have decreased, as they've continued to raise list prices, said one of the people.
Hundreds of drugs saw list price increases this year, according to Elsevier, a health-information analytics company. The average increase was around 7.9 percent, shows a Bloomberg analysis of data for this year through Feb. 5.
Read more:
- Lowering drug prices: Can California make it happen?
- Price hikes on name-brand drugs cancel out savings from generics
- New bipartisan bill targets drug prices–and Mylan
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