Two Republican senators on Tuesday issued sharp warnings to the pharmaceutical industry about price controls.
The GOP-led Senate Judiciary Committee hearing on Tuesday showed that the Trump administration's idea of an international reference model, aimed at just a subset of Medicare drugs, has transformed at least some Republican thinking on the drug-pricing policy debate.
The so-called international price index demonstration hasn't been officially proposed yet, but congressional GOPers are skeptical of the policy. Some Republican lawmakers have framed it as a strategy from HHS Secretary Alex Azar to get manufacturers to the negotiating table.
This rift first surfaced when Sen. Josh Hawley (R-Mo.) launched a tense discussion of the bill he co-sponsored with Sen. Rick Scott (R-Fla.). The legislation would essentially bring an international price index to the commercial insurance market.
Hawley told James Stansel, general counsel for the trade group Pharmaceutical Research and Manufacturers of America, that he believes American patients shouldn't pay "78% of monopoly profits" while other countries' citizens pay less.
Stansel criticized the method as simply a price control measure—a potent argument for many in Congress. He argued that policymakers should instead consider renegotiating U.S. trade agreements to force other countries to shoulder more research and development costs.
By the end of the hearing, Sen. John Kennedy (R-La.) was exasperated after he asked Stansel to explain why U.S. drug prices were the highest in the world and was told that other countries "use the threat of stealing patents" to keep their own prices down.
"They do it, and as a result they have lower drug prices and we look like chumps," Kennedy said.
When Stansel again raised the idea of renegotiating trade agreements, Kennedy urged him "to step up to the plate and make reasonable requests that are doable."
Kennedy also criticized Congress for not yet figuring out legislation but said that in the meantime the public demand is intensifying.
"Some people say we were born tired and raised lazy," he said. "We haven't accomplished anything on this issue. Sooner or later the American people are going to demand it. If you don't make concrete suggestions so we can both prosper, we're going to end up with price controls. That's a fact."
Using patent licenses as leverage over price-setting is what Rep. Lloyd Doggett (D-Texas) has proposed in legislation backed by House progressives and staunchly opposed by House Republicans.
Sen. Thom Tillis (R-N.C.), who is facing a primary challenger in his race to keep his Senate seat, was the only Republican to criticize the international price index. He said that if it's adopted "you're going to see innovation dry up overnight."
The stakes are high for even a small shift among Republicans on a macro cost control measure, as House Speaker Nancy Pelosi (D-Calif.) works on a bill to lower at least some drug prices through arbitration. Her office is in talks with the White House over a potential deal.
Lawmakers agreed to pass the Creates Act and to ban pay-for-delay practices, which are considered easy targets. But they also touted bills that delve deeper into other patent games, such as so-called "patent-hopping" and "patent-stacking," abuses of the FDA's "citizen complaint" process and more.
Stansel, as the PhRMA representative, was left with the defense for why specialty drugs warrant myriad patent extensions for product tweaks. And in this case, he had to defend more drugs than just AbbVie's Humira—the anti-inflammatory drug whose 136 patents have drawn congressional scrutiny and lawsuits. The drug is considered an extreme outlier in the industry.
But Sen. John Cornyn (R-Texas), who will introduce a bill to boost Federal Trade Commission authority for fighting patent thickets and patent-hopping, talked about other drugs too. He brought up Revlimid, the blood cancer drug that costs $18,000 for a 21-day supply although the FDA approved it in 2005.
"The patents won't expire until mid-2030s," Cornyn said. "Is anyone on the panel willing to defend status quo?"
Stansel defended the current system, arguing that where abuses occur the courts can already interfere. For medications like cancer drugs and insulin, he said the patent structure in place protects what he called "incremental innovation."
Sen. Chuck Grassley (R-Iowa) touted the bill he is co-sponsoring with Sen. Amy Klobuchar (D-Minn.) to boost FTC authority to fight manufacturers who use FDA's citizen complaint system to keep generic drugs out of the market.