Update (February 5, 2024): Last month, the Committee on Health, Education, Labor and Pensions (HELP) was planning to hold a vote to issue subpoenas for the CEOs of Johnson & Johnson and Merck to testify about the high cost of some of their drugs in the US. Before the vote, which was to take place on January 31, 2024, the pharma executives agreed to voluntarily testify before the HELP committee. Johnson & Johnson CEO Joaquin Duato and Merck CEO Robert Davis will join Bristol Myers Squibb CEO Chris Boerner at a hearing the committee will hold on February 8, 2024 at 10am EST. Sanders thanked the CEOs of Johnson & Johnson and Merck for agreeing to join Bristol Myers Squibb’s CEO to voluntarily testify before the HELP Committee and said the use of a subpoena was “clearly a last resort.”
Originally published on January 24, 2024:
In a bold move to tackle the high cost of prescription drugs in the US, Senator and Chairman of the Committee on Health, Education, Labor and Pensions (HELP) Bernie Sanders (I-Vt.) announced that the committee will hold a vote on January 31 to issue subpoenas for the CEOs of two major pharmaceutical companies, asking them to provide testimony on high US drug prices.
The targets of the subpoenas are Johnson & Johnson CEO Joaquin Duato and Merck & Co. CEO Robert Davis, who in November, refused Sanders’ invitation to testify about the high cost of some of their medicines in the US compared to other countries.
In a statement announcing the committee vote, Sanders said the three companies, which includes Bristol Myers Squibb along with Johnson & Johnson and Merck, were invited in November to a committee hearing “to explain why it is that one out of four Americans cannot afford to take the medicine their doctors prescribe while prescription drug companies make billions in profits and pay their CEOs exorbitant compensation packages.”
If authorized, Sanders said these would be the first subpoenas issued by the HELP Committee since 1981.
Along with Johnson & Johnson and Merck, the HELP Committee had also extended an invitation to Bristol Myers Squibb CEO Chris Boerner, which the company accepted as long as one other company executive could be present with him.
So far, five other CEOs, including executives at Novo Nordisk, Eli Lilly, Moderna and Sanofi, have agreed to testify at the committee’s drug pricing hearings.
The step, aligned with Sanders’ longstanding commitment to healthcare reform, aims to shed light on the opaque pricing mechanisms that often leave Americans struggling to afford essential medications.
Related: March-In Rights Could be Exercised by Biden Administration to Help Lower Drug Prices
The Context of High US Drug Prices
The issue of high drug prices in the US is not new, but it has become increasingly pressing in recent years. Americans consistently pay more for prescription drugs than people in other developed countries. This disparity can be attributed to various factors, including the lack of government regulation on drug prices and the complex web of negotiations between drug manufacturers, insurers and pharmacy benefit managers.
Sanders, a vocal advocate for ‘Medicare for All’ and a critic of the pharmaceutical industry, has been at the forefront of the fight to lower drug costs.
US Drug Prices, Pharma Profits and CEO Compensation
In the statement, Sanders said, “It is absolutely unacceptable that the CEOs of Johnson & Johnson and Merck have refused an invitation by a majority of members on the HELP Committee to appear before Congress about the outrageously high price of prescription drugs.”
“These CEOs may make tens of millions of dollars in compensation. The pharmaceutical companies they run may make billions in profits. But that does not give them a right to evade congressional oversight. It is time to hold these pharmaceutical companies accountable for charging the American people the highest prices in the world for the medicine they need. As the HELP Committee considers legislation to lower prescription drug prices, it is critical that these CEOs explain how they determine the price of medicine in the United States,” he said.
Sanders called out the price disparities of specific drugs in the US versus other countries. This included Merck’s diabetes drug Januvia (sitagliptin), which has a list price of $6,000 in the US compared to $900 in Canada and $200 in France. Merck’s Keytruda (pembrolizumab), the world’s top-selling cancer drug, costs $191,000 in the US but just $89,000 in Germany. Johnson & Johnson’s blood cancer treatment Imbruvica (ibrutinib) is $204,000 in the US compared to $46,000 in the UK and $43,000 in Germany, while Bristol Myers Squibb’s blood thinner Eliquis (apixaban) is $6,700 in the US and $900 in Canada and $650 in France.
Sanders also detailed company profits and CEO compensations.
In 2022, he pointed out that Johnson & Johnson made $17.9 billion in profit and its CEO received $27.6 million in compensation. In the same year, Merck’s total profit was $14.5 billion and the company’s CEO took home $52.5 million in compensation. Bristol Myers Squibb earned $6.3 billion and its former CEO, Giovanni Caforio, received $41.4 million in compensation.
Johnson & Johnson, Merck Responses
Responding to the subpoenas, in a letter dated January 12, 2024, addressed to Sen. Sanders, Brian Smith, representing Johnson & Johnson through the Washington DC law firm Covington & Burling, expressed that it was not appropriate for Johnson & Johnson to provide testimony. He said AbbVie, a collaborator of Johnson & Johnson, is responsible for setting the prices for Imbruvica.
Additionally, he noted that Johnson & Johnson only has the US rights to the anticoagulant Xarelto (rivaroxaban), another medication under investigation. Regarding Stelara (ustekinumab), another drug identified by the committee, Smith mentioned that it is expected to lose a crucial patent in early 2025, which would allow for competition from biosimilar products.
A Johnson & Johnson spokesperson commented that the company respects the committee’s work but has “concerns with the hearing as it is currently planned.”
Jennifer Zachary, General Counsel for Merck, issued a letter to the committee in which she communicated that the pharmaceutical company is “committed to working with the US government.” She highlighted Merck’s support for measures designed to reduce out-of-pocket expenses for individuals on Medicare.
Johnson & Johnson and Merck said that they had offered to send other company executives who could better speak on US drug pricing and commercialization to the HELP Committee hearing. The committee rejected that proposal, which has led the companies to be concerned.
Zachary accused senators on the committee of launching a “broad-ranging public spectacle, with witnesses you can question on pending litigation you disagree with.”
The pending litigation in question is a lawsuit filed by the three companies against the US government over the Medicare drug price negotiation program, which is part of the Biden administration’s Inflation Reduction Act (IRA). The program is aimed at lowering the price of some of the most expensive medicines in the US. The companies are challenging the program, saying it grants the government unjust negotiation powers over US drug pricing, which they say could cause a dent in profits leading to cuts in research and development.
“The hearing and invitation to testify appear intended to single out and punish the companies for their decision to challenge the ‘Drug Price Negotiation Programme’ in court,” said Zachary in the letter to the committee.
She noted that, “the decision to invite only the three companies you have selected to testify at a January 25 hearing raises serious questions about whether the hearing is being planned in service of a valid legislative purpose and consistent with the First Amendment.”
“Your insistence on CEOs appearing at a public hearing serves only to underscore the concerns we have raised,” Zachary wrote.
Zachary proposed that instead of Merck’s CEO appearing before the committee, another witness could testify, or that the committee could exchange questions and answers in written form. She also suggested organizing a briefing with Sanders and his team.
Last year, during a hearing of the HELP Committee, Moderna’s CEO promised Chairman Sanders that the company would establish a patient assistance program. This initiative was aimed to ensure that all individuals in the US could receive a COVID-19 vaccine without any out-of-pocket costs. In a different session of the same committee, the CEO of Eli Lilly assured that the company would not increase the prices of existing insulin products.
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