Twenty-five years ago, Congress hauled before it the top executives of the nation’s seven largest tobacco companies and forced them to make a number of long-overdue admissions about cigarettes — including that they might cause cancer and heart disease and that the executives had suppressed evidence of their addictive potential. In one dramatic exchange, when pressed by Reps. Henry Waxman and Ron Wyden, the executives denied that their products were addictive but admitted that they would not want their own children to use them.
The hearing ushered in a public health victory for the ages. In its wake, lawmakers and health officials enacted measures that would ultimately bring smoking rates in the United States to an all-time low.
With seven pharmaceutical executives set to testify before the Senate Finance Committee on Tuesday, one can only hope for a similarly pivotal moment for prescription drug prices. Like their predecessors in the tobacco industry, the drugmakers will testify at a time of near-universal anger over industry antics.
Drug prices are soaring in a way that defies reason. A vial of insulin that cost less than $200 a decade ago now sells for closer to $1,500. Actimmune, a drug that treats malignant osteoporosis and sells for less than $350 for a one-month supply in Britain, costs $26,000 for a one-month supply in the United States. And the prices of many drugs — that treat cancers, high blood pressure, allergies and more — have risen so much that average consumers are rationing them, at grave peril. Not even experts seem to know how those prices are set or why they keep rising.
)
)
)
The industry’s own explanations — that other entities in America’s byzantine health care system are to blame for most price increases, and that its products are expensive and risky to make — are tough to swallow, given drug companies’ conspicuous profit margins. Its response to the crisis of soaring drug prices has been meager at best — and duplicitous at worst. Last year, several companies agreed to hold off on planned price increases, but only for six months, and only after President Donald Trump chastised them on Twitter. Those same companies have aggressively resisted both state and federal efforts to enact formal changes to drug pricing rules.
Trump has not kept his campaign promise to “negotiate like crazy” with drugmakers to lower the cost of their products, and his statement in May that the industry would soon announce “voluntary, massive” price cuts came to naught. But his bluster on the issue, along with his blueprint for resolving it, have at least helped to keep a spotlight on the pharmaceutical industry and its questionable practices.
If the members of the Senate Finance Committee want to make use of that spotlight, here’s what to ask executives on Tuesday:
How do you determine list prices for drugs? Who decides the factors that go into the companies’ drug-pricing formulas, and why can’t those formulas be made public? Senators should also ask Olivier Brandicourt, chief executive of Sanofi — the only major insulin maker scheduled to participate in the hearing — why the cost of insulin continues to rise year after year, given that the drug has been available for roughly a century, and in many cases still enjoys patent protection. On Friday, Sen. Chuck Grassley and now-Sen. Wyden, the ranking members on the Finance Committee, opened an investigation into insulin prices.
What’s a fair profit margin for lifesaving products? A common lament among pharmaceutical executives has been that without enough profit from one drug, companies can’t afford to make the next one. That’s a fair point. Still, many leading companies enjoy billions of dollars a year in pure profit, even as lives are put at risk for want of basic medications. Insurers are subject to a 15 to 20 percent cap on profits and administrative expenses. Congress should consider a similar requirement for certain prescription drugs.
How much do you spend on research and development, and where do those dollars go? Pharmaceutical companies routinely argue that drug prices are high because research and development is expensive and because any successful drug is preceded by many failures. Industry critics, however, note that a good deal of basic research is funded by the federal government, through the National Institutes of Health, and not by the drugmakers. Many leading drugmakers spend most of their research dollars looking for new uses of existing drugs, not on risky innovations. And independent studies show that research and development costs for drug companies are not large enough to explain high drug prices.
Why would any drug need nearly 250 patents? Patent protection enables drugmakers to recoup the money they spend developing and marketing a new product. But most experts agree that leading drugmakers have gamed this system: By applying for dozens of patents for minor technical tweaks that provide little clinical benefit, they stave off competition for decades.
Take Humira, which treats inflammatory disorders like arthritis and Crohn’s disease, and is the best-selling prescription drug in the world. It has been on the market for nearly two decades, and it is still protected from competition by 247 patents, most of which were taken out years after the drug came on the market. Richard Gonzalez, the CEO of AbbVie, the company that makes Humira, will appear at Tuesday’s hearing. Can he justify that practice?
What will you change? The senators must not allow drugmakers to point the finger elsewhere on Tuesday. Yes, insurance companies and other entities play a role in the drug cost crisis. But this hearing is not about them. It’s about the pharmaceutical companies. And those companies need to take meaningful steps toward lowering drug prices. If the Finance Committee members come prepared Tuesday, they could finally force the industry to help relieve the strain.
This article originally appeared in The New York Times.