Politics
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Three major pharmaceutical company CEOs will testify before the Senate tomorrow, including Johnson & Johnson. The hearing held by the Senate Health Committee will discuss the astronomically high prices Americans are forced to pay for drugs critical to chronic diseases.
Undoubtedly, the testimony will address pending lawsuits filed by the companies themselves to stop federally mandated Medicare negotiations with the companies to lower drug prices. Thanks to the Inflation Reduction Act, Medicare had the authority to negotiate lower prices for essential drugs, much to the ire of big pharmaceutical companies.
The best way to understand the issue of sky-high drug costs for Americans and the ongoing litigation over Medicare negotiations is to flashback to late last year, when Congressman Ro Khanna grilled Johnson & Johnson’s assistant general counsel , Aviva Wein.
Banking
Late last year, Aviva Wein, assistant general counsel at Johnson & Johnson, testified before Congress on the issue of lowering drug prices for Americans. Ms. Wein didn’t count on Congressman Ro Khanna coming in with some hard numbers and what should have been an easy question for her to answer.
MP Khanna used the leukemia drug Imbruvica to demonstrate the staggering cost of critical blood cancer drugs. Not surprisingly, Ms. Wein didn’t know the details of how much Imbruvica costs, but Congressman Khanna managed to inform her.
He explained that the cost of one Imbruvica tablet costs $484, which equates to about $14,000 a month in medication. For a year of therapy, the cost of a blood cancer patient is 160,000 dollars.
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When asked, Ms. Wein could not provide the overall profits she brought in to her employer, but once again Congressman Khanna did not disappoint. He explained that Johnson & Johnson has earned $22 billion from Imbruvica over the past decade.
Overall, for 2023, Congressman Khanna let Ms. Wein know that the company she represents made $65 billion. After illustrating how well Johnson & Johnson is doing with Imbruvica, things got interesting.
A simple question
Johnson & Johnson, among other drug companies, is suing the federal government over the Inflation Reduction Act’s requirement that Medicare try to negotiate a reduction in the price of drugs just like Imbruvica. Johnson & Johnson’s lawsuit claims this negotiation constitutes an “unfair taking.”
The lawsuit references the “commitments clause” of the Fifth Amendment which states:
βNor shall private property be used for public use without just compensation.β
In essence, the argument is that the federal government is taking drugs like Imbruvica from the company that makes it to administer to the public without providing adequate payment. Remember, Johnson & Johnson currently makes $160,000 a year for every blood cancer patient who buys its drugs.
Congressman Khanna asked Ms. Wein:
βDo you believe that when the Veterans Administration negotiates drug prices with you that it constitutes a violation of the takings clause?β
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Just as with every question posed by Congressman Khanna, Ms. Wein could not answer. To which MP Khanna rightly underlined the absurdity of her inability:
βYou’re here, you’re the assistant general counsel for a company accusing the United States government of taking your property because we’re negotiating drug prices, and you can’t answer one simple question…β
It sounds much like any other congressional hearing on any other topic.
The point
Tomorrow the CEOs of Merck, Johnson & Johnson and Bristol Myers Squibb will testify at a Senate Health Committee hearing on drug pricing. While the CEO of Bristol Myers Squibb had freely accepted his invitation to testify, it took the threat of a subpoena for the CEOs of Merck and Johnson & Johnson to agree.
If the Senate Health Committee had issued the subpoenas, it would have been the first time in 40 years that the committee had to use such a tactic. Note that the following drugs are on the list for negotiation with Medicare:
- Januvia, Merck’s anti-diabetic drug
- Imbruvica, Johnson & Johnson’s blood cancer treatment
- Eliquis, anticoagulant by Myers Squibb
The problem isn’t just that these drugs are expensive and have a significantly higher negative impact for those specifically on Medicare. The point is that it is more expensive to buy almost any drug in the United States than anywhere else in the world.
For example:
- Merck’s Januvia list price is $6,900 in the US β $200 in France
- The list price of Johnson & Johnson’s psoriasis drug Stelara is $79,000 in the US – $16,000 in the UK
- The list price of the Myers Squibb Eliquis is $7,100 in the US – $650 in France
Why is it so expensive for Americans suffering from chronic diseases to buy the drugs they need compared to the French and English? Why is it a problem for Medicare to negotiate lower prices than the VA?
My point is that neither of these questions will be answered tomorrow, but both deserve an answer. But one thing is certain: It wasn’t long ago that these same companies, particularly Johnson & Johnson, were being hailed as heroes for promoting an experimental vaccine.
Political elites have short memories; we hope that those who elected them remind them of the long battle with big Pharma.
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