Legislators Call Out Antitrust Conduct in the Drug Industry, Call Regulators’ Remedies Ineffective


The drug industry has developed a temporary cure for partisan wrangling on Capitol Hill: the high cost of health care and prescription drugs.

Democrats and Republicans in both chambers of Congress have come out against drug industry practices such as paying generic drug companies to delay the release of lower-priced versions of their products. The tactic drew criticism as anticompetitive at least and immoral at worst. Rep. David N. Cicilline (D-RI), for example, said the average hospital stay for a child with cancer is $40,000; organ transplants often cost more than $1 million; and drug costs have increased 200% in 10 years. Ten years is also the time it took for the FTC to settle an antitrust case against a drug company that employed the “pay-to-delay” tactic to settle a patent infringement case against a generic drug maker. Cicilline said even successful cases like this one are “too time consuming to provide effective relief,” something the FTC stated in an earlier hearing.

“These outrageous, unsustainable, and immoral costs are ruining lives,” Cicilline said. “Prices are skyrocketing and people are dying or bankrupted as a result. Kaiser Health reports that a quarter of Americans cannot afford their medicine, while many ‘cancer patients are delaying care, cutting their pills in half or skipping drug treatment entirely.’ Despite decades of rising costs, the United States ranks dead last in health outcomes among other high-income countries.”

Cicilline is chairman of the House Antitrust, Commercial and Administrative Law Subcommittee. He made his comments on March 7 during a hearing designed to explore the impact of health care market consolidation and anticompetitive conduct.

The congressman said one solution was bill H.R. 965, the “Creating and Restoring Equal Access to Equivalent Samples Act of 2019,” or the ‘CREATES Act, which he introduced with House Judiciary Committee Chairman Jerrold Nadler (D-NY), Rep. Jim Sensenbrenner (R-RI), and Rep. Doug Collins (R-GA).

‘Market-Based Solutions’

In his statement, Rep. Nadler cited an FTC study which concluded that pay-for-delay agreements will have cost American consumers $35 billion over the decade from 2010 to 2020. Rep. Sensenbrenner called it a “common-sense bill that will implement market-based solutions, making prescription drugs more affordable, saving taxpayers money, and providing much-needed relief to the American people.”

On Feb. 26 the Senate took its swipes at the industry going face-to-face with executives from Pfizer, Merck & Co., Johnson & Johnson, AbbVie, Bristol-Myers Squibb, Sanofi and AstraZeneca.

Sen. Ron Wyden (D-OR), ranking member of the Senate Finance Committee, told the executives that the way they do business is “unacceptable and unsustainable,” saying they “behave as if patients and taxpayers are unlocked ATMs full of cash to be extracted, and their shareholders are the customers they value above all else.” He went on to chronicle how one company was able to double the price of one drug because it had the exclusive, and used a “thick cobweb of patents, legal tricks, and shadowy deals with other drug makers” to maintain its revenues. Wyden noted that the CEO of that company received a multi-million-dollar bonus based in part on the sale of that drug. He went on to take the rest of the companies to task for similar conduct, calling it “profiteering and two-faced scheming.”

Sen. Chuck Grassley (R-IA), chairman of the Finance Committee, said his constituents are hurting from the high cost of prescription drugs. “Whether it’s about the EpiPen, insulin, or other prescriptions, in the thousands of letters I’ve received, Iowans have made clear that high drug prices are hurting them. I’ve heard about people skipping doses of their prescription drugs to make them last until the next paycheck. I’m not a doctor, but rationing one’s medicine doesn’t sound like a safe prescription for health
and wellness.”

Sen. Grassley acknowledged that medical innovations take time and money. “But,” he said, “we’re all trying to understand the sticker shock that many drugs generate. Especially when some of those drugs have been around for a long time. There is a balance between incentivizing innovation and keeping prices affordable for consumers and taxpayers. Like all systems, things can get out of balance.”

‘We Do all of This to Serve Patients’

Merck CEO Kenneth C. Frazier started off his testimony reminding everyone that his company’s mission is to bring to market affordable breakthrough medicines. Merck is a “science-based company that exists to help solve the world’s most vexing medical challenges,” he said.

Frazier listed several of Merck’s best-known breakthroughs, including converting AIDS from a fatal illness to a chronic disease. He noted that Merck invested nearly $70 billion in research and development since 2010 with a focus on life-ending diseases like cancer and Alzheimer’s. “At the end of the day we do all of this to serve patients,” he said, but acknowledged that prices are a burden for individuals.

Frazier said the industry has a duty to be responsible for affordability issues. He said patients must get the benefits of large rebates and discounts manufactures pay to pharmacy benefit managers and insurers; that there must be a viable market for biosimilars in the U.S.; and that manufacturers and payers must be able to negotiate contracts so drug makers are “rewarded based on the value that our therapies deliver.” Finally, Frazier said he supports one of the versions of the CREATES Act to “encourage generic competition.”

“I applaud the FTC’s stance on pay for delay agreements, the 6th Circuit for adopting the FTC’s per se argument, and Congress for taking action where courts have not,” says MoginRubin’s Jennifer M. Oliver. “While patents are legal monopolies that may promote research and innovation, they have a limited lifespan for good reason. These pharmaceutical companies seek to circumvent that function to pad their already-behemoth profits. Insurance companies and the individuals who pay their premiums should not allow it to stand.”

 

Further Reading

You can read all of the statements presented by members of the committee and those who testified on Feb. 26 HERE, and additional testimony on Feb. 29 from consumers and health care advocates HERE.

You can read the FTC statement re settlement of “pay-to-delay” cases HERE.

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