Dems slam drug pricing strategies as 18-month probe comes to an end

The House Oversight committee held a pair of hearings this week on drug prices. And the Democrats on the panel did not hold back.

Executives from Bristol Myers Squibb (and Celgene), Teva, Amgen, Novartis and Mallinckrodt testified before Congress in the culmination of an 18-month investigation into rising drug prices.  The proceedings, built on work from the late Elijah Cummings, produced more than one million documents from the companies and largely concluded that profit was the main driving force behind the increases.

“The drug companies are bringing in tens of billions of dollars in revenues, making astronomical profits, and rewarding their executives with lavish compensation packages—all without any apparent limit on what they can charge,” committee chair Carolyn Maloney (D-NY) wrote.

The hearings were split up over two days, with Celgene, BMS and Teva execs appearing Wednesday and Amgen, Novartis and Mallinckrodt testifying Thursday. Celgene was acquired by BMS last year, and though BMS CEO Giovanni Caforio testified, most of the questioning dealt with Celgene’s business practices before the acquisition.

Before Wednesday’s meeting, the committee released two reports that outlined how Celgene and Teva methodically raised prices of the blockbusters revlimid and copaxone, respectively, in order to meet sales targets. The report cites one instance from March 2014, when Celgene exec Mark Alles — who later became CEO — expressed disappointment in Revlimid’s sales that quarter and directed a 4% price increase in response.

“Mr. Alles emailed his team to ensure that the price increase would go into effect as quickly as possible to have the maximum impact on sales,” the report wrote. Alles later said in an email, “can we take the increase tonight so that it impacts sales beginning tomorrow?”

After Celgene approved that change, it implemented the increase the same evening.

Teva, meanwhile, contracted with middlemen to try to block lower-cost generics from reaching the market and engaged in high-dollar lobbying efforts to convince doctors to keep using their more expensive drugs, according to the reports. About 55% of Teva’s 2019 revenue came from the generics market.

On Thursday, the other three companies entered the ring and saw reports on their own businesses practices released. Novartis, like Teva, was singled out for its apparent openness to discussing middleman contracts as a way to keep generic competition at bay for Gleevec. The committee also found that Novartis increased Gleevec’s price at a faster rate toward the end of their market exclusivity window.

Amgen was not found to have engaged in such middlemen strategies when pricing Enbrel. Rather, the committee said Amgen conducted “shadow pricing” plans by attaching their Enbrel increases to those of its major competitor, AbbVie’s Humira. The committee chided Amgen for not setting their prices lower than Humira to gain market share as would be normally expected in a competitive market, it said.

“Shortly after AbbVie increased the price of Humira by 9.7% in January 2018, Amgen executed an identical 9.7% price increase, more than double what it had originally planned,” one of the reports said.

Mallinckrodt faced questions about the pricing tactics of its HP Acthar Gel and acquisition of Questcor, which owned the rights to the drug.

Questcor raised the price of Acthar to $31,000 per vial, up from $40 in 2001. Mallinckrodt then increased the price by another $8,200.