Senators grill Merck, J&J and Bristol Myers Squibb CEOs over high U.S. drug pricing

Sen. Bernie Sanders, left, appears at a news conference with Sen. Ed Markey on issuing subpoenas for pharmaceutical company CEOs to testify regarding drug prices, in the Capitol, Jan. 25, 2024.

Bill Clark | Cq-roll Call, Inc. | Getty Images

Senators are questioning the CEOs of Johnson & Johnson, Merck and Bristol Myers Squibb on U.S. drug prices at a hearing Thursday, as lawmakers on both sides of the aisle work to rein in high health-care costs for Americans. 

The push to cut drug prices is one of those rare hot-button issues that unites the two major political parties, even though they often back different approaches. 

Roughly 9 million American adults did not take their drugs as prescribed in 2021 due to the high cost of medications, according to a federal survey. Prescription drug prices in the U.S. are also more than 2.5 times as high as those in other high-income nations, another federal report showed.

The Senate Health, Education, Labor and Pensions Committee says that’s especially true for some of the top drugs from J&J, Merck and Bristol Myers Squibb.

The committee’s hearing includes testimony from J&J CEO Joaquin Duato, Merck CEO Robert Davis and Bristol Myers Squibb CEO Chris Boerner. Duato and Davis had initially declined to appear.

Ahead of the hearing, the committee noted that the three companies manufacture some of the most expensive drugs sold in the U.S.: Merck’s immunotherapy drug Keytruda, Bristol Myers Squibb’s blood thinner Eliquis, and J&J’s immunosuppressive medication Stelara. 

“The overwhelming beneficiary of these high drug prices is the pharma industry,” Sen. Bernie Sanders, who chairs the Senate Health panel, said during the hearing. He added that “they’re doing phenomenally well while Americans cannot afford the medicines they need.”

Sanders hopes the hearing could bear fruit for Americans, especially after Eli Lilly’s CEO promised not to raise the prices of the company’s insulin products during a similar hearing in May. 

Drugmakers want to protect innovation

In opening remarks, the three CEOs acknowledged the high cost of health care in the U.S. But they also emphasized the need to strike a balance between lowering prices and maintaining the pharmaceutical industry’s ability to invest in discovering new medicines.  

“Patients bear the brunt of a complex U.S. system that sees increasing health care costs and a lack of affordability. We have to make the system work better for them,” said Boerner, adding that drugmakers “have a role to play in addressing affordability.” 

But he added that Bristol Myers Squibb supports policies that “lower patient out-of-pocket costs without ultimately harming innovation.”

Duato noted that J&J prices its drugs to meet its commitment to innovate and develop new medicines for patients, which requires a “massive” investment. J&J has spent nearly $78 billion in research and development since 2016, he said. 

Merck, for its part, invested $46 billion in R&D between 2011 to 2023, and expects to spend another $18 billion in the 2030s, Davis noted during his opening remarks. 

Meanwhile, Bristol Myers Squibb has spent more than $65 billion in R&D over the past decade, according to Boerner.

Still, a report released Tuesday by the committee claims that J&J and Bristol Myers Squibb each spent $3.2 billion more on stock buybacks, dividends and executive compensation than they did on R&D for finding new drugs in 2022. Merck, however, spent less on executive compensation than on R&D that year, the report said.

Annual drug costs, launch prices and patents

In the report, the Senate committee said the current annual cost of Keytruda is $191,000 in the U.S. but significantly lower in Germany, at $89,000, and in Japan, at $44,000. 

The panel’s report cited drug pricing and reimbursement data from NAVLIN, a drug price database. The costs reflected are list prices of the drugs before insurance and other rebates. 

The report also noted that Keytruda’s annual cost has increased over time: It was $147,000 in 2015, the first full year the drug was on the market. 

Meanwhile, the current annual cost of Eliquis is $7,100 in the U.S. but just $940 in Japan and $770 in Germany, according to the report. Bristol Myers Squibb began selling the treatment in 2013 for $3,100 in the U.S. and $1,000 in Japan. 

The report said the current annual cost of Stelara is $79,000 in the U.S., while it’s $14,000 in Japan and $30,000 in Germany. 

The three drugmakers “begin by setting exorbitant prices for new drugs,” the panel wrote in its report. “Then, as patients come to rely on these drugs, these companies raise prices, forcing patients to pay more or abandon ongoing treatment.”

The report also highlighted strategies that the committee said J&J, Merck and Bristol Myers Squibb have been using to “preserve their pricing power by any means necessary.” That includes filing more patents on the same medicine to extend its exclusivity, barring cheaper copycats from entering the market. 

Merck holds 64 active patents and 51 pending patents on Keytruda, according to the report, which cited a database called the I-MAK Drug Patent Book. 

Johnson & Johnson currently has 15 active patents and 21 pending patents on Stelara. Meanwhile, Bristol Myers Squibb holds 18 active patents and two pending patents on Eliquis.

List prices are also increasing for new drugs that the three companies roll out, the report said. 

From 2004 to 2008, the median launch price of new prescription drugs sold by J&J, Merck and Bristol Myers Squibb was more than $14,000. But over the past five years, the median launch price of new drugs sold by those companies was more than $238,000. 

Notably, some of the top drugs from the three companies will be subject to the first round of Medicare drug price negotiations, a key policy under the Inflation Reduction Act that aims to make costly medications more affordable for seniors. That includes Eliquis, Stelara and Merck’s diabetes drug Januvia. 

J&J, Merck and Bristol Myers Squibb are all suing to halt the negotiations, which will establish new prices to take effect in 2026.

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