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Echoes of Big Tobacco fight in Big Pharma hearings

Drug companies have leveraged high-profile hearings on rising drug prices into an opportunity

From right, Sanofi CEO Olivier Brandicourt, Pfizer CEO Albert Bourla, Merck CEO Kenneth C. Frazier, Johnson & Johnson pharmaceuticals head Jennifer Taubert, Bristol-Myers Squibb CEO Giovanni Caforio, AstraZeneca CEO Pascal Soriot, and AbbVie CEO Richard A. Gonzalez prepare to face a Feb. 26 Senate Finance hearing on rising drug prices. (Tom Williams/CQ Roll Call file photo)
From right, Sanofi CEO Olivier Brandicourt, Pfizer CEO Albert Bourla, Merck CEO Kenneth C. Frazier, Johnson & Johnson pharmaceuticals head Jennifer Taubert, Bristol-Myers Squibb CEO Giovanni Caforio, AstraZeneca CEO Pascal Soriot, and AbbVie CEO Richard A. Gonzalez prepare to face a Feb. 26 Senate Finance hearing on rising drug prices. (Tom Williams/CQ Roll Call file photo)

Congress has made curtailing high drug prices a priority this year and has hauled in some of Big Pharma’s top executives to prove it.

Committee hearings on drug prices — the House and Senate have held a half dozen this year — have sought accountability from the industry for drug prices that have forced patients into agonizing decisions about how to budget their lives and caused one-in-four diabetics to ration insulin.

A recent study shows the cost of brand-name medicines has increased sharply in the last decade, driven largely by price increases on existing drugs, not new breakthroughs.

The Senate Finance Committee called in the CEOs of seven of the world’s largest drug companies to testify in February. Ranking Democrat Ron Wyden of Oregon likened the panel of executives raising their right hands to testify truthfully about a growing public health crisis to the landmark tobacco hearings of the 1990s.

The headline of a New York Times editorial in January read “It’s Time for Pharmaceutical Companies to Have Their Tobacco Moment.”

Like a pivotal moment in the anti-tobacco movement two decades ago, growing grassroots anger over the cost of medicines has put lawmakers in a bind, advocates say.

“It does look very much guaranteed that something will happen on drug prices. There is too high a critical mass calling for change,” said Alex Lawson, executive director of Social Security Works.

But pharmaceutical companies have leveraged the high-profile hearings into an opportunity to muddy the waters.

In their testimony, drugmakers and sympathetic interest groups have pitched policy solutions that seem promising, but would ultimately pad their profits, and possibly drive up prices for patients in the long run.

The risk, advocates say, is losing momentum on weak measures that do not lead to lower prices at the pharmacy counter.

Some experts say it’s a well-worn tactic, and harkens to that earlier anti-tobacco fight.

“This strategy of kind of acknowledging the problem and proposing a solution that would actually worsen the problem was pioneered by Big Tobacco in the mid-1980s,” said Stanton Glantz, a professor of medicine at the University of California, San Francisco and director of the Center for Tobacco Control Research and Education.

The witnesses are sworn in during the tobacco hearings before the House Committee on Commerce in January 1998. The witnesses from left to right are,Laurence A. Tisch,Co Chairman of Loews Corp.,Geoffrey Bible,Chairman Of Philip Morris,Vincent A. Gierer,Jr.,CEO UST,Inc.,Steven F. Goldstone,CEO(CONGRESSIONAL QUARTERLY PHOTO BY DOUGLAS GRAHAM)
Top tobacco executives take the oath during a House Commerce hearing in January 1998. From left, Laurence A. Tisch, co-chairman of Loews Corp.; Geoffrey Bible, chairman of Philip Morris; Vincent A. Gierer Jr., CEO of UST, Inc.; and Steven F. Goldstone, CEO of RJR Nabisco. (Douglas Graham/CQ Roll Call file photo)

Nixing rebates

The CEOs of seven companies — AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi — used the February hearing to pitch Congress on nixing rebates as a solution to high drug prices. (Rebates are the payments drug companies make to pharmacy benefit managers, or PBMs, which manage the drug benefits paid out by insurers.)

“We hope to be a constructive partner in finding solutions,” said Pascal Soriot, the CEO of AstraZeneca. “The fact that many patients struggle with out-of-pocket costs despite the discount and rebates we provide stands counter to our mission of improving patient health.” 

Critics of PBMs, which include pharmaceutical companies but also independent patient advocacy groups and health policy experts, say rebates create a perverse incentive for pharmaceutical companies to increase their prices.

But Wyden followed up with the drugmakers, requesting written testimony on whether, should federal regulators scuttle the rule that allows for rebates, they would lower their prices commensurate to the value of the rebate.

In those written responses, made public this month, the companies hedged, saying that pledging to lower their prices equal to the PBM markup would be premature without knowing how other players would respond to the change.

Drugmakers stand to reap tens of billions of dollars more in revenue from such a change, but when pressed, the companies stopped short of committing to passing along that revenue to hurting patients.

“In case there was any doubt, Big Pharma is not about to start self-policing their pricing practices,” Wyden said in a statement. “In order to prevent a cash grab that gives drug makers a windfall and leaves consumers stuck with high prices, Congress must take significant action to end business as usual in the broken drug pricing system.”

Watch: Drugmaker protects Humira exclusivity ‘like Gollum with his ring,’ Wyden says

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‘Industry-friendly priorities’

The drug hearings have served as “a venue to promote industry-friendly priorities, such as measures that put controls on PBMs and other players, but not manufacturers,” said Elizabeth Rowley, the director of T1International, a diabetes advocacy group that does not accept funding from the drug industry.

“Patients will keep speaking out until true, long-term solutions are created because our lives depend on it,” she added.

Meanwhile, advocates sympathetic to drugmakers have used the committee hearings to pitch measures that reduce out-of-pocket costs for patients, while allowing drug companies to charge the same prices.

The Diabetes Patient Advocacy Coalition, or DPAC, a 501(c)(4) advocacy group that does not disclose its industry donors, said in testimony during a House Energy and Commerce hearing on insulin prices earlier this month that Congress should undo the anti-fraud regulations that prevent some Medicare patients from accessing the coupons and patient assistance programs offered by drugmakers to encourage them to choose pricey brand-name drugs over cheaper generics.

“For the 2.3 million Medicare beneficiaries who use insulin, this is the ultimate betrayal,” DPAC President Christel Marchand Aprigliano said.

But experts say there are already avenues for Medicare patients to benefit from these programs, and rolling back those regulations would only encourage fraud and siphon away federal health care spending to drug companies and away from other priorities.

DPAC did not respond to questions about these concerns or about whether drug companies fund the group, instead replying: “DPAC plays an important role in elevating awareness about access issues to a life-essential drug in today’s U.S. policy discussions and providing realistic solutions. … Patient assistance programs and copay cards provide some respite, but not for all.”

Similarly, at a Senate Finance hearing on drug prices in January, the conservative 501(c)(3) nonprofit American Action Forum pressed lawmakers on longstanding priority: making changes to the 340B program, which grants discounts on outpatient drugs to hospitals that treat low-income patients.

The pharmaceutical lobby has also pushed lawmakers to draw back the discount, saying it shifts costs to patients.

But the 340B program makes up just 1 percent of the total drug market, according to a lobby group for hospitals on the issue called 340B Health.

And it’s not clear that relieving drugmakers of the obligation to pay out the discount would translate to pocketbook savings for patients.

“The pharmaceutical industry is lying to us. There is no way, even if tomorrow the 340B program went away, there would be any material effect on drug prices. It’s an itsy bitsy program,” said John Hassell, the national advocacy director of the AIDs Healthcare Foundation.

He accused the American Action Form of acting as a mouthpiece for industry, pointing to funding accepted by its sister organization, American Action Network, from the pharmaceutical lobby.

“The American Action Forum is an independent 501(c)(3) focused on educating the public about complex policy issues and potential solutions,” said Angela S. Kuck, the group’s communications director. “While our donors are free to disclose their financial support as they wish, we don’t disclose or discuss our donors.”

11/5/97.TOBACCO SETTLEMENT: Senate Commerce Committee Chairman John McCain,R-Ariz.,and Ranking Member Ernest F. Hollings,D-S.C.,during a press conference on the bill on global tobacco settlement..CONGRESSIONAL QUARTERLY PHOTO BY DOUGLAS GRAHAM
Senate Commerce Chairman John McCain, R-Ariz., center, and ranking member Ernest F. Hollings, D-S.C., during a 1997 press conference on the global tobacco settlement. (Douglas Graham/CQ Roll Call file photo)

Stalling action

Whether it’s the tobacco industry or the pharmaceutical industry, executives push against solutions that can fit onto a bumper sticker (or into a hashtag) and push toward highly technical ones, Glantz said.

With complicated solutions, lobbyists and insiders can work in advantageous provisions that go overlooked even by sophisticated members of the public.

One lesson of those historic tobacco hearings is to beware of being diverted by measures without a real impact.

In the 1990s, momentum gathered behind a “global settlement” that would have settled all public and private litigation against the tobacco industry. But the agreement — championed on Capitol Hill by Arizona Republican Sen. John McCain — ultimately would have pre-empted stronger federal and state regulations while granting the industry immunity from future private class action suits.

The tobacco industry “figured out saying ‘we won’t do anything’ was becoming politically impossible. So friendly politicians signed on to pretend solutions that prevented progress,” Glantz said.

The tobacco industry simultaneously forged relationships on Capitol Hill through campaign contributions. Research by the Saint Louis University School of Public Health shows donations from over a dozen tobacco PACs were positively associated with pro-tobacco votes, directly contributing to preventable deaths caused by smoking.

The pharmaceutical industry contributed about $24 million to lawmakers in both parties in the 2018 cycle, rivaling the campaign spending of other power interest groups such as lobbyists and the oil and gas industries, according to 

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