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Pressed by Sanders, Big Pharma CEOs Refuse to Commit to Lower Drug Prices
"We are aware of the many important, lifesaving drugs that your companies have produced," said Sen. Bernie Sanders. "But I think as all of you know, those drugs mean nothing to anybody who cannot afford it."
Feb 08, 2024
The CEOs of major pharmaceutical companies refused Thursday to commit to lowering the prices of some of their top-selling drugs when pressed by Sen. Bernie Sanders, who noted that the same medicines are available in other countries for a fraction of the cost that Americans pay.
"We are aware of the many important, lifesaving drugs that your companies have produced. And that's extraordinarily important," Sanders (I-Vt.) said in his opening remarks during a Senate Health, Education, Labor, and Pensions Committee hearing. "But I think as all of you know, those drugs mean nothing to anybody who cannot afford it. And that's what we're dealing with today."
Sanders asked the chief executives of Merck and Bristol Myers Squibb whether they would pledge to reduce the sky-high U.S. list prices of their cancer and blood clot medications to levels that patients pay for those drugs in Japan and Canada.
Neither agreed to make the commitment, even after they acknowledged that they still make a profit in those countries despite selling their products at much lower prices than in the U.S.
When Bristol Myers Squibb CEO Chris Boerner claimed that medicines are cheaper in Canada because they are "generally made less available" and more difficult for patients to obtain, Sanders—who has famously traveled across the U.S.-Canada border with patients seeking affordable medications—countered that "life expectancy in Canada is six years longer than it is in the United States."
Three CEOs in total—Boerner of Bristol Myers Squibb, Robert Davis of Merck, and Joaquin Duato of Johnson & Johnson—testified at Thursday's hearing, which was titled, "Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?"
Boerner voluntarily agreed to testify in early January, but Davis and Duato only agreed to appear before the Senate HELP Committee after Sanders threatened subpoenas. The committee votes to approve the subpoenas were canceled after Davis and Duato dropped their opposition to testifying.
All three of the companies represented at Thursday's hearing are currently suing the Biden administration in an effort to kill the Medicare price negotiation program established under the Inflation Reduction Act.
Before questioning the executives, Sanders noted that a growing number of patients in the U.S. have been forced to resort to the crowdfunding platform GoFundMe to help pay for their medications. GoFundMe's website notes that "thousands of individuals in need use GoFundMe each month to raise funds for lifesaving prescription drugs."
Sanders asked Davis, who made $52 million in total compensation in 2022, whether he would "commit to not accepting a single dollar more in compensation until there is not a single GoFundMe page for Keytruda," a Merck cancer drug that carries a list price of $191,000 a year in the U.S.
Davis said Merck is "very much sensitive to what's happening with patients" but would not make the commitment.
Davis told Sanders that he has never searched GoFundMe for campaigns launched by cancer patients struggling to afford Keytruda. Sanders noted in response that his staff found over 500 stories of people trying to raise funds for the cancer medication, which brought in $6.61 billion in sales worldwide for Merck last year.
"One of those stories is a woman named Rebecca, a school lunch lady from Nebraska with two kids who died of cancer after setting up a GoFundMe page because she could not afford to pay for Keytruda," Sanders said. "Rebecca had raised $4,000 on her GoFundMe page, but said the cost of Keytruda and her cancer treatment was $25,000 for an infusion every three weeks."
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'Stakes Are Huge': Medicare Makes Opening Bids in Price Negotiations With Big Pharma
"For the first time, Medicare isn't just accepting whatever prices the drug corporations set for expensive and widely used drugs," said one campaigner.
Feb 01, 2024
The Biden administration announced Thursday that it made its opening bids as part of Medicare's historic drug price negotiation program, which major pharmaceutical companies are working hard to kill in court.
The initial offers, which were not made public, were sent to the manufacturers of the 10 drugs that the Biden administration selected for the initial round of price negotiations. Additional medicines will be subject to price negotiations in later years.
The companies—including Merck, Johnson & Johnson, Pfizer, and Amgen—have 30 days to either accept Medicare's proposed maximum fair price for the selected medicines or put forth a counteroffer. Over the coming spring and summer, Biden administration officials will hold negotiation meetings with drug company representatives to resolve price disputes if the government doesn't accept the drugmakers' counters.
In September, the Centers for Medicare and Medicaid Services (CMS) will publish the negotiated prices, which won't take effect until 2026.
Margarida Jorge, the head of Lower Drug Prices Now, said in a statement Thursday that "for the first time, Medicare isn't just accepting whatever prices the drug corporations set for expensive and widely used drugs in Part D like Xarelto and Eliquis—instead, the agency, newly empowered under the new Medicare negotiations law, will propose lower prices for 10 of the most expensive drugs in Medicare Part D to kick off the negotiations process."
Jorge noted that around 9 million seniors on Medicare "spent an estimated $3.4 billion out-of-pocket on these ten drugs in 2022 to treat blood clots, cancer, diabetes, arthritis and other common conditions."
"Big Pharma made record profits by using their monopoly power to set prices and keep them high, forcing many Medicare patients to forgo other necessities, incur debt, or go without medicine because the prescriptions were not affordable," Jorge added. "Now, despite a barrage of lawsuits, paid ads, and threatening prognostications from the drug corporations, Medicare is on track to implement the new reforms that will lower prices, make costs affordable, and save taxpayers billions over the next decade."
"We are moving ahead to help people in spite of pharma's efforts to block negotiation in the courts."
The list prices of the drugs chosen for the initial round of negotiations range from around $7,000 a year in the case of Johnson & Johnson's Xarelto to over $133,000 annually for AbbVie and Johnson & Johnson's Imbruvica.
Lawrence Gostin, faculty director of the O'Neill Institute for National and Global Health Law at Georgetown University, said he expects the price negotiations to be "tense and hostile" given that the "stakes are huge for industry and the administration."
"It'll end up at SCOTUS and become a central issue in the 2024 presidential election," Gostin predicted.
A majority of the initial 10 drugs are made by companies that are currently suing the Biden administration in an effort to strike down the price negotiation program, which represents a serious challenge to the industry's ability to drive up prices at will.
According to government data, the selected drugs accounted for roughly 20% of total Medicare Part D spending between June 1, 2022 and May 31 of last year.
An analysis released earlier this month by the Commonwealth Fund found that list prices for the 10 drugs are three times higher on average in the U.S. than in other rich countries.
David Mitchell, founder of Patients for Affordable Drugs, said Thursday that the Biden administration's opening offers mark a "big step forward to lower drug prices."
"We are moving ahead to help people in spite of pharma's efforts to block negotiation in the courts," Mitchell added. "A good day for America."
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Senate Panel to Vote on Subpoenas for CEOs of 'Pharma Profiteers'
"The pharmaceutical companies they run may make billions in profits," says HELP Committee Chair Bernie Sanders. "But that does not give them a right to evade congressional oversight."
Jan 18, 2024
U.S. Sen. Bernie Sanders announced Thursday that the Senate Committee on Health, Education, Labor, and Pensions—which he chairs—will vote later this month on subpoenas to force two pharmaceutical CEOs to explain "why their companies charge substantially higher prices for medicine in the U.S. compared to other countries."
Last November, Sanders and HELP Committee Democrats asked the CEOs of Johnson & Johnson, Merck, and Bristol Myers Squibb to testify at a hearing on drug prices. Bristol Myers Squibb CEO Chris Boerner agreed to testify. The January 31 vote will decide whether to compel Johnson & Johnson CEO Joaquin Duato and Merck CEO Robert Davis to do so.
"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," Sanders—who has previously grilled Big Pharma executives about their price gouging—said in a statement.
"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."
"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," the senator continued. "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," Sanders added.
An affirmative vote would be the committee's first approval of subpoenas since 1981. Consumer advocates welcomed the prospect of such action.
"Time's up for the prescription drug price gougers," Public Citizen president Robert Weissman said in a statement. "For too long, Big Pharma executives have behaved as if they are immune from accountability. They take publicly funded research; skyrocket prices to the moon, forcing patients to ration or skip medications they need; and then laugh as the very government that paid for the original research accepts without negotiation their outrageous prices, paying multiples of what other countries pay."
Weissman continued:
Merck charges 30 times more for a diabetes drug in the United States than it does in France. Johnson & Johnson charges almost five times more for a blood cancer drug in the United States than it does in Germany.
Meanwhile, Johnson & Johnson is paying out more in stock buybacks, dividends, and executive compensation than they are spending on research and development, even though R&D is the only claimed rationale for high prices.
"The pharma profiteers know exactly what they are doing," Weissman asserted. "They know how they are forcing rationing. They know they are ripping off the government and taxpayers. And they know they are getting rich."
"What's different now is that they can no longer escape public accountability," he added. "The hearings at which they will be forced to testify are another key marker in the process of rationalizing prescription drug pricing policy in the United States."
That process, Weissman said, includes the federal government negotiating drug prices thanks to a provision in the Inflation Reduction Act signed into law by U.S. President Joe Biden in 2022. Last August, the Biden administration announced the first 10 drugs subject to price negotiations. The makers of those drugs—and Republican U.S. lawmakers—have challenged the policy.
However, as Weissman put it on Thursday: "It's a new day, Big Pharma. Get used to it."
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Sanders, Dems Invite Pharma CEOs to Testify on Sky-High Drug Prices
"The American people have a right to know why it is that they pay, by far, the highest prices in the world for prescription drugs," said the Vermont senator.
Nov 21, 2023
U.S. Sen. Bernie Sanders and every Democratic member of the committee he chairs sent letters on Tuesday inviting the CEOs of three major pharmaceutical companies to testify at an upcoming hearing on the nation's prescription drug costs, which are so high that millions of Americans are forced to ration their medications to save money.
"The American people have a right to know why it is that they pay, by far, the highest prices in the world for prescription drugs while the pharmaceutical industry in the U.S. makes hundreds of billions in profits and pays their CEOs tens of millions of dollars in compensation," Sanders (I-Vt.), chair of the Senate Health, Education, Labor, and Pensions (HELP) Committee, said in a statement.
In letters to the top executives of Johnson & Johnson, Merck, and Bristol Myers Squibb, Sanders and his Democratic colleagues asked, "How does it happen 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 executives exorbitant compensation packages?"
"How does it happen," the letters continue, "that the median price of new prescription drugs in the United States was over $220,000 last year, while the pharmaceutical industry spent billions on stock buybacks and dividends?"
Johnson & Johnson, Merck, and Bristol Myers Squibb are some of the U.S. pharmaceutical industry's biggest offenders when it comes to charging Americans exorbitant prices for medications that can be purchased at a fraction of the cost in other countries.
In a statement, Sanders' office pointed to Johnson & Johnson and AbbVie's Imbruvica, a blood cancer drug that carries a list price of roughly $204,000 for an annual supply in the U.S. The drug sells for $46,000 annually in the United Kingdom and $43,000 in Germany.
Imbruvica is one of the 10 drugs that the Biden administration selected for an initial round of price negotiations with Medicare, which was empowered to directly negotiate prescription medicine costs with pharmaceutical companies under the Inflation Reduction Act.
The three companies run by the invited executives have all sued the Biden administration over the Medicare price negotiations. In September, a federal judge in Ohio rejected an effort by the U.S. Chamber of Commerce to halt the negotiations.
Sanders said Tuesday that he looks forward to "hearing from the CEOs of large pharmaceutical companies directly on this critical issue."
"I also look forward to working with my colleagues in the Senate to lower the outrageously high price of prescription drugs," the senator added. "A lifesaving drug is not effective if the patient who needs that drug cannot afford it."
The hearing—titled "Why Does the United States Pay, By Far, the Highest Prices in the World for Prescription Drugs?"—is set to take place on January 25, 2024.
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I’m with Biden—Make the Gougers Negotiate
Under the president’s anti-inflation policy passed last year, our Medicare program can now negotiate drug prices on our behalf, which will drastically lower what we are now forced to pay to the profiteers for certain drugs.
Sep 10, 2023
We human beings sometimes do some terrible things in pursuit of the almighty dollar. But to our credit, one moral line most humans don’t cross is to gouge sick people on the price of medicines their lives depend on.
Unless, of course, you count executives of giant pharmaceutical corporations as human beings. Gouging patients is their preferred business model.
It’s a scream, then, to watch Big Pharma fall into a sky-is-falling fit over our government’s long-overdue move to give patients some bargaining power over this monopolistic industry. Under President Joe Biden’s anti-inflation policy passed last year, our Medicare program can now negotiate drug prices on our behalf.
Mega-drug outfits like Johnson & Johnson, Merck, and Bristol Myers spend more on advertising, exorbitant executive salaries, lobbying, and big stockholder payouts than on research.
This will drastically lower what you and I are now forced to pay to the profiteers for certain drugs.
For decades, Congress has coddled the corporate gougers who maintain by far the biggest lobbying army in Washington, allowing them to manipulate patent laws and rig the system. As a result, we Americans pay two-to-three times more than people in other countries for the exact same medicines.
“Oh,” wail drug executives, “bloated profits give us the incentive to keep developing innovative new cures.” Hold it right there, Slick—most basic drug development is done by tax-funded medical researchers, not brand-name market hucksters.
Mega-drug outfits like Johnson & Johnson, Merck, and Bristol Myers spend more on advertising, exorbitant executive salaries, lobbying, and big stockholder payouts than on research. Still, these same greedhounds are suing Biden, howling that making them negotiate is an unconstitutional “taking” of their income.
But hello—these scoundrels have been taking our income, health, and lives for years.
I’m with Biden on this—as is 80% of the public (including 77% of Republicans) who favor making the gougers negotiate. To stay informed and involved, connect with Public Citizen at citizen.org.
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'No Surprise': Big Pharma Sues Biden Over Effort to Lower Drug Prices for Americans
"This legal action underscores how critical it is to have a president in the White House who will fight for lower health costs for Americans," said U.S. Sen. Ron Wyden.
Jun 21, 2023
Aiming to protect wealthy pharmaceutical companies from any reduction in their tens of billions of dollars in annual profits or lavish CEO compensation packages, the industry's biggest lobbying group on Wednesday announced a lawsuit against the Biden administration over its policy allowing Medicare to negotiate lower drug prices for consumers.
Part of the Inflation Reduction Act that was passed last year, the Medicare negotiation provision has been a key demand of progressives including Sen. Bernie Sanders (I-Vt.) for several years, as the United States pays more per person for prescribed drugs than any other country and nearly a third of Americans said in one survey last year that they have avoided taking medications due to costs.
Although a Congressional Budget Office analysis found last year that allowing Medicare to negotiate lower drug prices would save the U.S. nearly $290 billion in new revenue and savings over a decade, the Pharmaceutical Research and Manufacturers of America (PhRMA) on Wednesday became the latest pro-industry group to sue over the provision, arguing the law is unconstitutional.
PhRMA argued in a court filing in the Western District of Texas that the provision violates the constitutional requirement for checks and balances by placing too much authority in the hands of the U.S. Department of Health and Human Services (HHS), the due process clause by denying drug companies input regarding pricing, and the Eighth Amendment's ban on "excessive" fines due to the excise tax Big Pharma companies will be required to pay if they refuse to negotiate.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) said it was "no surprise" that pharmaceutical companies want to stop Medicare from saving millions of senior citizens out-of-pocket costs—and warned that they'll likely be successful if a Republican candidate wins the presidency in 2024.
"I expect the Biden administration to vigorously defend Medicare's bargaining power so seniors will see the lower drug prices they expect," said Wyden. "This legal action underscores how critical it is to have a president in the White House who will fight for lower health costs for Americans. I have deep concerns that a Republican administration would roll out the red carpet for Big Pharma and once again ban Medicare from negotiating lower drug prices."
PhRMA was joined by the National Infusion Center Association and the Global Colon Cancer Association in the legal challenge, which follows a lawsuit filed by drugmaker Merck earlier this month. The U.S. Chamber of Commerce and Bristol Myers Squibb have also sued over the provision this month, with the latter claiming, as PhRMA did Wednesday, that the law is "bad for innovation."
"We remain very concerned about the impact this law will have on patients and future innovation," PhRMA CEO Steve Ubl said.
The economic justice campaign Unrig Our Economy said Big Pharma is fighting any provision to help Medicare beneficiaries "while hardworking families struggle to pay for lifesaving medicine."
PhRMA is seeking a permanent injunction to stop the negotiation process, three months before the government is scheduled to choose the first 10 drugs to which the provision will apply. The new prices are set to take effect in 2026.
"We will vigorously defend the president's drug price negotiation law, which is already helping to lower healthcare costs for seniors and people with disabilities," a spokesperson for HHS told The Hill. "The law is on our side."
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Why Should Drug Corporations Like Merck and Eli Lilly Even Exist?
These predatory corporations try to present themselves as socially responsible, but their business model continues to hurt the very people they claim to care about.
Jun 15, 2023
How do Big Pharma executives have the nerve to show their faces in public, much less threaten to sue the government that has enriched them with the treasure—and the lives—of the American public? Government-funded discoveries have given drug companies like Merck and Eli Lilly much, if not most, of their patented technology. The government’s lax attitude toward drug company predation and criminality has made them even richer.
A recent staff report from the Senate Health, Education, Labor, and Pensions (HELP) Committee and its chairman, Sen. Bernie Sanders, found that “the average price of new treatments over the past 20 years that NIH scientists helped invent is $111,000 – more than ten times the price that led the NIH to first introduce a reasonable pricing clause in 1989.”
And yet, at the first sign that the government might ask for something in return, these corporations bite the hand that feeds them. Unfortunately, it’s the public who bleeds.
Merck’s crass lawsuit and Lilly’s bombastic threat are only the latest reminders that these corporations prey on the lives and wealth of people in the U.S. and all around the world.
How rich is Merck? Its net income was $19 billion last year, an increase of 40 percent over the previous year. Its CEO received $18,469,835 in total compensation. On average, Merck’s senior executives received more than $10 million each in 2022. More than half of that was awarded in the form of shares, giving each of Merck’s leaders a multi-million-dollar incentive to maximize profits regardless of the human cost.
And yet, these senior executives don’t seem embarrassed. In fact, the global pharmaceutical corporation is suing the United States government to prevent it from negotiating prices on a handful of drugs as permitted under the Inflation Reduction Act (IRA) passed last year.
And, as this article was being prepared for publication, the head of Eli Lilly & Co. exhibited a similarly pathological detachment from human need. CEO David Ricks threatened to withhold medicine from seniors and disabled people on Medicare unless his demands were met. Adopting the mock empathy of an arm-twisting gangster, Ricks said that refusing drugs to these patients would be “really sad for people who rely on government benefits, but it’s a consequence that market actors will pursue [to] restrict their exposure to the law ...”
Nice little prescription ya got here, pal. Be a shame if somethin’ happened to it.
(Irony note: Ricks, who was paid $21.1 million last year, demanded the repeal of the IRA’s drug provisions at an investment conference hosted by global bank-cum-crime syndicate J. P. Morgan.)
That isn’t ‘business as usual.’ It’s a hostage crisis. And it raises a different question, one Ricks would undoubtedly prefer we not ask: if “market actors” can’t provide the public with the medicines they need, why should we entrust private actors with our medicines?
I recently interviewed Merith Basey, Executive Director of Patients for Affordable Drugs (video below), an organization that does excellent work on drug policy. Basey remarked that the IRA is “a first step in fighting back against the power of pharmaceutical corporations.” You could say that’s a “glass half full” (or “syringe half full”) response, but she’s right that the law could affect the drug pricing crisis. In fact, the Inflation Reduction Act’s drug pricing provisions are among its few features that would actually reduce inflation. They were watered down significantly from Democrats’ original proposals, however, which in turn were much weaker than what is done in similar nations. As Basey correctly observed, the US is the only developed country that does not have a comprehensive system for regulating overall drug prices.
Merith Basey: Merck Pharma Bros Fight for Greedwww.youtube.com
The IRA’s compromises were due in part to the $16.4 million and $15 million spent by Merck respectively on lobbying as the Act was drafted, as well as on the millions of dollars in campaign contributions Merck and Lilly executives routinely lavish on both parties. And it didn’t hurt that 50 out of 57 lobbyists prowling the halls of Congress in 2021 for Merck were ex-government officials themselves; few things are more persuasive than a friendly face offering ready cash.
Still, the government did something. The law’s drug pricing provisions allow Medicare to negotiate prices for only ten drugs to start, but the government will be able to choose the costliest among them and more can be added in subsequent years. (There’s no guarantee it will use this power effectively, however, which is why Sanders says he will not approve any more government healthcare nominees until the administration releases its plan.)
Drug pricing also poses a longer-term threat to corporations like Merck: that the public will see how effective these negotiations are and want them extended to all medications and patients. That may explain the unmitigated gall of Merck’s executives, whose lawsuit argues that negotiating with the government – the largest purchaser of prescription medications in the country – is “tantamount to extortion.”
Extortion! Merck’s executives and board—a group that includes veterans from the weapons industry, venture capital, and a tax-dodging consulting company—think it’s unfair to negotiate prices with the American people. Meanwhile, the company’s recklessness has caused tens of thousands of deaths—deaths that could plausibly be deemed “involuntary manslaughter” (i.e., causing death while acting “in a unlawful manner”) in a fairer legal system.
In case you have any residual sense of goodwill toward Merck, let me help you with that:
- Merck sold its painkiller Vioxx for five years after initial trials raised the possibility that it caused heart attacks. It did. By the time Merck pulled Vioxx from the market it had caused an estimated 88,000 heart attacks among Americans. 38,000 of them died.
- Merck reportedly made a “hit list” of doctors who disliked Vioxx, which included words like “neutralize” and “discredit”; an internal email said of such physicians, “We may need to seek them out and destroy them where they live ...”
- Merck concealed reports of sexual dysfunction and other risks from its anti-baldness drug Propecia, including a “long trail of suicide reports.”
- Merck was forced to pay $2.3 billion to settle tax fraud charges.
- Merck paid $650 million to settle for violating the False Claims Act by overbilling Medicaid.
- Merck paid $1.5 million to settle charges of violating federal environmental laws in its Pennsylvania manufacturing facilities. Its additional environmental violations include the use of methylene chloride and proven animal carcinogens as a solvent in some drugs.
- Merck paid $688 million to settle claims that it concealed the poor clinical trial outcomes for Vytorin, an anti-cholesterol drug.
These are not the nicest or most law-abiding people.
Merck, like most predatory corporations, tries to present itself as socially responsible, but its business model continues to hurt the people it claims to care about. “Merck for Mothers” is a program whose stated goal is “to help create a world where no woman has to die while giving life.” What about the mothers who died after taking Vioxx?
Merck publicly withdrew funding from the Boy Scouts in response to the scouts’ anti-gay ban. What about the gay people can’t afford Isentress, a Merck anti-HIV medication that often costs more than $2,000 per month? And what about all the vulnerable people who take Januvia, the Merck diabetes drug that retails for a monthly average cost of $547? As Basey noted, Januvia is taken by about one million Medicare recipients and Medicare Part D has already spent $17 billion on it, even though it is fifteen years old.
Nope, says Merck, we still won’t negotiate.
Sadly, Merck and Lilly aren’t outliers in their industry; they are the norm.
Merck’s executives aren’t the only ones profiting from its malfeasance. So are some Senate and House members. They shouldn’t; nobody should. It's blood money. It’s profit without honor.
Merck’s executives should remember their company’s own history. Originally the subsidiary of a German company, Merck’s US assets were nationalized during World War I under the Trading with the Enemy Act. It may be time to revise our definition of an “enemy.” By endangering our lives and wealth, these corporations are endangering our national security.
Sadly, Merck and Lilly aren’t outliers in their industry; they are the norm. Merck’s crass lawsuit and Lilly’s bombastic threat are only the latest reminders that these corporations prey on the lives and wealth of people in the U.S. and all around the world. Drug price negotiation is a great idea, but there comes a point when talking to people like these is tantamount to negotiating with terrorists.
If these corporations can’t meet the public’s health needs—and the evidence suggests they can’t—the government should eliminate these antisocial middlemen and produce the public’s medicines itself.
(The Zero Hour andSocial Security Works, along with many other policy and advocacy organizations, signed an open letter calling on the government to overhaul our broken drugs-for-profit system.)
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'Shameless Greed': Pharma Giant Merck Sues to Kill Medicare Drug Price Negotiations
"This lawsuit is a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma's ability to price gouge Medicare," said one consumer advocate.
Jun 06, 2023
Merck on Tuesday became the first pharmaceutical company to sue the Biden administration over a recently enacted law that empowers Medicare to directly negotiate the prices of a small number of high-cost prescription medicines with drug makers—a change that could threaten Merck's bottom line.
Filed in a federal court in Washington, D.C., Merck's lawsuit characterizes the drug price negotiation policy established by the Inflation Reduction Act as "tantamount to extortion" and claims the "singular purpose of this scheme is for Medicare to obtain prescription drugs without paying fair market value."
The lawsuit against the Health and Human Services Department (HHS) and the Centers for Medicare and Medicaid Services (CMS) also alleges that the drug price negotiations make "a mockery of the First Amendment" by "conscripting companies to legitimize government extortion."
The suit asks the court to "declare that the program effects compensable takings under the Fifth Amendment, and enjoin its compelled 'agreements' under the First Amendment."
Patient advocates and lawmakers responded with disdain to Merck's lawsuit, which likely won't be the last from an industry that fights aggressively to maintain its power to drive up prices at will. The Centers for Disease Control and Prevention released data last week showing that more than 9 million Americans are delaying medication refills, skipping doses, and taking smaller dosages than prescribed due to high costs.
"Merck is doing everything it can to protect its profits at the expense of patients who need their prescriptions to stay healthy and get treatment for everything from cancer to diabetes," said Sen. Patty Murray (D-Wash.), a senior member of the Senate Health, Education, Labor, and Pensions Committee. "While big drug companies may not want to be at the negotiating table, the American people are sick and tired of giant pharmaceutical corporations putting their executives' paychecks above patients."
Keytruda, Merck's cancer drug, carries an annual list price of $175,000, and the U.S. government has spent billions helping patients cover the cost of the medicine in recent years.
"Merck is claiming the U.S. Constitution requires the U.S. government and people to be suckers. That's not true," Robert Weissman, president of the consumer advocacy group Public Citizen, said in a statement Tuesday. "This lawsuit is a desperate attempt by the industry to beat back popular legislation that would curtail Big Pharma's ability to price gouge Medicare and secure monopoly profits. Full stop."
"While Big Pharma's litigation gambit plays out, it is critical that the federal government continue its preparation for price negotiations," Weissman added. "Delay in the commencement of long-overdue negotiations will result in billions of dollars in excess costs for taxpayers and consumers."
"No one needs to read Merck's fancy lawyer talk or PR spin to know what this is all about—it is about them wanting to continue to fleece taxpayers and gouging seniors."
In September, CMS is expected to release a list of the first 10 Medicare Part D drugs that will be subject to direct price negotiations. Manufacturers of the selected drugs will then have until the following month to sign an agreement to conduct negotiations, and the agreed-upon prices will take effect in 2026.
Dozens of additional prescription drugs covered by Part D or Part B will be subject to price negotiations in the years following 2026. Though the prices of just a small number of drugs will be negotiated under the Inflation Reduction Act provisions, the policy could have a significant impact given that a sliver of medicines accounts for a large percentage of Medicare's prescription drug spending.
The Congressional Budget Office concluded earlier this year that "price negotiation will lower average drug prices in Medicare and will reduce the budget deficit by $25 billion in 2031."
As The New York Times noted Tuesday, Merck's Keytruda "could be among the first products targeted when negotiations begin in 2028 on drugs administered in a healthcare setting."
"Merck had been expecting to bring in significant revenue from a new formulation of Keytruda it is developing that can be more easily given under the skin," the Times reported. "That could be subject to negotiation, too, under the government's plans for the program."
Margarida Jorge, head of the Lower Drug Prices Now campaign, said Tuesday that Merck's lawsuit is "nothing but a political stunt motivated by the same shameless greed that we're used to seeing from drug corporations that have made decades of inflated profits at the expense of patients' health and taxpayers' hard-earned money."
"No one needs to read Merck's fancy lawyer talk or PR spin to know what this is all about—it is about them wanting to continue to fleece taxpayers and gouging seniors so they can keep sky-high profits and soaring executive pay," said Jorge. "It's time for big drug corporations like Merck to give up their monopoly control over prices and negotiate fair prices for the medicines we need."
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Sanders Opposes FDA Chief Nominee Over Ties to 'Greedy' Big Pharma
While at Duke, Robert M. Califf received millions in funding and salary support from Eli Lilly, Merck, Novartis, and other drug companies
Oct 09, 2015
On Friday, Sen. Bernie Sanders (I-Vt.) said he would vote against President Barack Obama's nomination to head up the Food and Drug Administration (FDA), citing Dr. Robert M. Califf's ties to the pharmaceutical industry.
Califf, a cardiologist, and Duke University researcher became FDA deputy commissioner earlier this year, and Obama announced plans to nominate him as the agency's chief last month. But in light of several recent industry scandals that brought national attention to price gouging of life-saving medications, Sanders--who is running for president as a Democrat--said he would not support the status quo when the vote comes before the U.S. Senate health committee.
"At a time when millions of Americans cannot afford to purchase the prescription drugs they need, we need a new leader at the FDA who is prepared to stand up to the pharmaceutical companies and work to substantially lower drug prices. Unfortunately, I have concluded that Dr. Califf is not that person," Sanders said following a meeting with the nominee this week.
A recent expose by the New York Times revealed that Califf's multi-million dollar research center at Duke received more than 60 percent of its funding from the industry. At the same time, his 2014 financial disclosure documents showed drug companies like Eli Lilly, Merck, and Novartis paid him hefty fees for "consulting" and in salary support. And as the Boston Globe reported on Wednesday, Califf also took the "highly unusual" step of removing his name from a series of scientific papers criticizing the FDA's oversight of clinical trials--"a decision that could raise ethical concerns," explains the Globe's Sheila Kaplan.
"In a sense, he's the ultimate industry insider," Harvard political science professor Daniel Carpenter told the Times.
Sanders continued on Friday, "Instead of listening to the demands of the pharmaceutical industry and their 1,400 lobbyists, it is about time that the FDA and Congress started listening to the overwhelming majority of the American people who believe that medicine is too expensive."
"It is time for the United States to join the rest of the industrialized world by implementing prescription drug policies that work for everybody, not just the CEOs of the pharmaceutical industry," he said.
Given the recent price-gouging cases, both Sanders and Democratic frontrunner Hillary Clinton have made reform of the pharmaceutical industry central platforms of their campaigns. For his part, Sanders recently introduced a plan allowing Medicare to negotiate drug prices with manufacturers and lower barriers to importing cheap pharmaceuticals from other countries, such as Canada.
"The greed of the pharmaceutical industry is a public health hazard to the American people," Sanders said. "That has got to change."
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