Health

J&J, Merck and Bristol Myers Squibb CEOs Testify at Senate Hearing on Drug Prices

The chief executives of three major pharmaceutical companies defended their prices in front of the Senate health committee on Thursday, drawing them further into a confrontation with lawmakers and the Biden administration over the cost of some of the most widely used prescription medications.

Lawmakers, including Senator Bernie Sanders of Vermont, the panel’s chairman, noted that the companies charged more in the United States than in other wealthy countries, accusing them of profiting at the expense of American patients. The pharmaceutical executives — from Johnson & Johnson, Merck and Bristol Myers Squibb — conceded that patients in the United States paid too much but said that new medications arrived there faster than anywhere else in the world.

Mr. Sanders, an independent who has made reining in drug prices a signature cause of his late-career years in Congress, acknowledged that the companies had produced lifesaving drugs. But he singled out several widely used medications, including the blood thinner Eliquis from Bristol Myers Squibb, which he noted could be purchased for much less in Canada than in the United States.

“Those drugs mean nothing to anybody who cannot afford it,” Mr. Sanders said, adding that “millions and millions of our people cannot afford the outrageously high cost of prescription drugs in this country.”

The three executives who testified — Joaquin Duato of Johnson & Johnson, Robert M. Davis of Merck and Christopher Boerner of Bristol Myers Squibb — acknowledged that drug prices were often higher in the United States than in other wealthy countries.

But they said lower prices in Europe and Canada, where governments are more focused on constraining costs, came with crucial downsides, like long waits for new drugs and limited insurance coverage.

“The United States has built a health care system that prioritizes patient and physician choice as well as the broad and rapid availability of cutting-edge medicines,” Mr. Boerner said.

At one point, Mr. Sanders, who accused the companies of using their drug profits to enrich executives and shareholders even as patients struggled to pay for medications, tried to solicit a promise from Mr. Boerner that the company would lower the U.S. sticker price of Eliquis to that in Canada. Mr. Boerner declined, citing the differences in Canada’s health system.

The hearing took place as a new federal program authorizing Medicare to negotiate the prices of some costly medications is getting underway. Federal health officials last week made their initial offers to the makers of the first 10 drugs selected for negotiations, five of which are sold by the companies whose executives testified on Thursday. Drugmakers, including all three companies represented at the hearing, have filed a flurry of lawsuits arguing that the negotiation program is unconstitutional.

As the pharmaceutical executives sat before them, lawmakers described anguished decisions that patients with high drug costs had faced. Mr. Sanders mentioned a woman in Nebraska who he said had died of cancer after she set up a GoFundMe campaign to pay for Keytruda, a cancer drug from Merck.

Senator Christopher S. Murphy, Democrat of Connecticut, said that one of his constituents on Eliquis had to choose between the cost of the medicine, food and rent.

Republicans on the committee pointed to what they said were the rightful market incentives that the companies used to price their drugs.

“In capitalism, if you’re running an enterprise where you have a fiduciary responsibility to your owners, you try and get as high a price as you can,” said Senator Mitt Romney, Republican of Utah. He added: “You think Chevrolet sits back and says, ‘Gosh, how can we get the price of this Chevrolet down?’ No, it’s like, ‘How high a price can I get and maximize the profit for my shareholder?’”

The hearing came after a standoff between Mr. Sanders and two of the pharmaceutical executives, Mr. Duato of Johnson & Johnson and Mr. Davis of Merck, who agreed to testify only after being threatened with subpoenas. The two companies suggested last month that Mr. Sanders was seeking to retaliate for their lawsuits challenging the Medicare price negotiation program.

Senator Bill Cassidy of Louisiana, the top Republican on the committee, said the panel’s strategy had been to “threaten a subpoena when C.E.O.s are suspicious that they won’t get a fair shake, hold the hearing, get sound bites, then pick another set of C.E.O.s for a show trial.”

“But we don’t pass meaningful legislation,” he said.

Prices for brand-name drugs in the United States in 2022 were on average at least three times as high as those in 33 other wealthy countries, a recent report funded by the Department of Health and Human Services found, even when taking into account discounts that reduce how much American health plans and employers pay.

Comparing drug prices in the United States with those in other countries can be tricky because the health care systems are so different. While European countries rely on a centralized negotiator, the U.S. system is fragmented, with tens of thousands of health plans and employers relying on intermediaries to handle their negotiations.

While many prescription drugs can be bought for much less at European pharmacies, insurance coverage is often broader in the United States, meaning that American patients sometimes face lower out-of-pocket costs than Europeans for the same medications.

At the hearing, the drug company executives blamed middlemen known as pharmacy benefit managers for saddling patients with high out-of-pocket costs. Those businesses procure discounts from manufacturers that reduce the bill for American health plans and employers but not for patients. Benefit managers make more money when the sticker price of a drug is higher, but patients often have to pay more. Lawmakers have proposed making modest changes to the practices of benefit managers.