CEOs hide as pressure on drug prices grows
This week, key committees in the House and Senate each held hearings on the rising cost of prescription drugs. In both cases, pharmaceutical CEOs were invited, but declined to testify.
This issue has been building for months and it appears that there is mutual and bipartisan interest in addressing it during the current Congress.
For a private-sector company CEO, testifying before Congress is never enjoyable. But it is a CEO’s responsibility to provide on-the-record answers to tough questions so our representatives can be informed on public policy issues.
In the case of the Senate Finance Committee hearing, none of the pharmaceutical companies appeared and two of the CEOs said they would meet only with Chairman Chuck Grassley, Iowa Republican, in private.
Mr. Grassley was not pleased.
He said, “I want to express my displeasure at the lack of cooperation from the pharmaceutical manufacturers recently. The Senate Finance Committee has a long history of working in a bipartisan manner to solve difficult problems for the American people. So, when Ranking Member Wyden and I invited several pharmaceutical companies to come and discuss their ideas to address high drug prices, I was extremely disappointed when only two companies agreed to do that. The companies that declined said they would discuss their ideas in private, but not in public.”
Mr. Wyden, Oregon Democrat, echoed Mr. Grassley: “The Finance Committee invited the heads of several of the largest drug companies to testify today. They weren’t willing to come answer our questions about why their products cost so much. Even if it means using our power to compel the drug company CEOs to show up, they will come before this committee. Thousands and thousands of people at any given moment are turning to fundraising websites and asking complete strangers for help covering the cost of their prescriptions. It is grotesque that price-hiking drug makers have turned American patients into beggars.”
In their opening statements, the two senators showed the legislative path they wish to take. They plan to investigate the causes of rising prices. They believe drug prices should be easy to understand with honest advertising on television. Congress appears particularly interested in passing legislation that requires increased transparency from pharmaceutical companies.
Together, these two senators introduced legislation that would prevent the manufacturer of the EpiPen from unreasonably inflating prices. Mr. Wyden pointed out that insulin prices have increased from $29 in 1996 to $275 today, even though the drug has not changed much.
Another area of focus is so-called PBMs (pharmaceutical benefit managers), which Mr. Wyden said make a profit without providing any benefit to the consumer, driving prices higher.
The reality is that the high cost of prescription drug prices directly benefits these companies, at the expense of consumers, so any legislative effort to lower drug prices must begin with these companies. Would these CEOs rather Congress act without their input?
The House Oversight and Government Reform Committee had its first hearing of the year this week and the subject was reducing the cost of drug prices.
Chairman Elijah Cummings, Maryland Democrat, highlighted the role of PBMs, the inability of Medicare to negotiate drug prices, and the exclusivity period for new drugs as areas he wants to explore.
Congress is deeply divided and there are precious few areas of true bipartisan legislative potential.
But Republicans and Democrats on Capitol Hill have promised to tackle high drug prices this year and their work began this week.
Big Pharma needs to ask itself one question: Would it rather be at the table or on the menu?
Matt Mackowiak is president of Austin, Texas, and Washington, D.C.-based Potomac Strategy Group. He’s a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators.