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February 26, 2019 12:00 AM

Pharma CEOs survive Senate grilling with few concessions

Susannah Luthi
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    Senate Finance Committee lawmakers extracted minimal policy concessions from seven top pharmaceutical CEOs Tuesday over hours of grilling. And they aren't likely to relieve tension with hospitals and insurers over drug prices.

    Following the hearing, stocks for most of the companies represented there rose slightly or held steady, while share prices for pharmacy benefit managers declined slightly.

    The CEOs broadly supported HHS' recent proposal to remove Medicare Part D safe harbor protections for pharmacy benefit manager rebates—but they were less vocal about promising to lower their prices should it be finalized. Some indicated they would want the commercial sector to follow suit, raising the specter of congressional action that insurers would oppose.

    "If rebates are removed from the commercial sector, we would definitely lower list prices," Pascal Soriot, CEO of AstraZeneca, told Senate Finance Committee Chair Chuck Grassley (R-Iowa).

    After the hearing, Grassley said he didn't have specifics on forthcoming legislative proposals, including on Part D.

    Additionally, lawmakers stated support for the bipartisan Creates Act, pushed last year by Grassley and Sen. Patrick Leahy (D-Vt.) and recently re-introduced. It's expected to pass this Congress.

    The Medicare Part B reimbursement structure for physicians who administer drugs through the program was also blamed. Merck's Kenneth Frazier and Johnson & Johnson's Jennifer Tauber—who was the only non-CEO on the panel—suggested reforms to that system.

    But while committee leaders Grassley and ranking Democrat Ron Wyden of Oregon made it clear from the start they wanted to talk about list prices and price transparency, the executives kept the conversation to rebates and broader supply chain issues.

    Grassley told reporters afterward he felt manufacturers are likely to come to the table to work with Congress even as he returned to the transparency issue.

    "Part of the problem we have here is the marketplace isn't working because there's not enough transparency," Grassley said. "There doesn't need to be this much secrecy in it."

    Upon leaving the hearing, Sen. James Lankford (R-Okla.) characterized it as another "anchor" in the process to get to drug-pricing legislation, but said it hadn't yielded any landmark finding.

    "The conversation about rebates is helpful, but rebates often mean that the taxpayer pays for it," Lankford told Modern Healthcare. "We need to figure out not just how the consumer gets cheaper prices, but the taxpayer as well."

    Potential congressional action on patent exclusivity did come up. In a testy exchange with AbbVie CEO Richard Gonzalez, Sen. John Cornyn (R-Texas) said he'd like to bring in the Senate Judiciary Committee to look at pharmaceutical patent abuses. Grassley also sits on the Judiciary panel and agreed.

    "I support drug companies recovering a profit based on R&D and development of innovative drugs," Cornyn said. "But at some point the exclusivity has to end."

    AbbVie holds 136 patents for Humira, launched in 2003, and a biosimilar alternative can't enter the U.S. market until 2023 even though there are biosimilars available in Europe. Gonzalez acknowledged Humira is making a profit in every country where it's sold.

    Seven pharmaceutical giants had to defend their industry to Congress on Tuesday: AbbVie, AstraZeneca, Bristol-Myers Squibb, Johnson & Johnson, Merck, Pfizer and Sanofi.

    Their products span insulin, cancer drugs, asthma medication, the best-selling anti-inflammatory Humira, and vaccines.

    Alex Kacik contributed to this report.

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