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Lawmakers grill pharmaceutical executives over drug prices, but CEOs avoid big pledges

Health care costs are a major concern for Americans, who spend more on prescription drugs than residents of any other country. On Tuesday, executives from seven of the biggest pharmaceutical companies appeared before a Senate committee to explain their rising prices. They were questioned about R&D spending, patent extensions and their own compensation. John Yang reports on a contentious hearing.

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  • Judy Woodruff:

    The costs of health care are a pocketbook issue for most Americans, and rising drug prices, a key part of that.

    People in the U.S. spend more on prescription drugs than in any other country, about $1,200 a year per person. Insurers and the government pay the largest share. But it's costing consumers more money in premiums and out of pocket.

    Anger has been building over affordability and specialty drugs that cost tens of thousands of dollars. That was the backdrop for a much-anticipated Senate hearing today involving the drug makers.

    John Yang has that report.

  • John Yang:

    It has been decades since this many leaders of the top drug manufacturers have faced lawmakers under oath.

    Senators in both parties lashed out at their profit margins and pressed them to explain why drug prices keep rising.

  • Sen. Ron Wyden, D-Ore.:

    All of you that are here today are here because the way you have been doing business is unacceptable.

  • John Yang:

    Finance Committee Chairman Chuck Grassley set the tone, tearing into the executives of seven pharmaceutical giants for shirking responsibility.

  • Sen. Charles Grassley, R-Iowa:

    Another yes-or-no question: When your company prices its drugs, do you take into account the fact that a key player is the federal government?

    Let's start with AbbVie.

  • Richard Gonzales:

    We evaluate all the channels when we make determinations on price and affordability.

  • Sen. Charles Grassley, R-Iowa:

    So, that obviously would include the federal government?

    AstraZeneca.

  • Pascal Soriot:

    Yes, we do.

  • Sen. Charles Grassley, R-Iowa:

    OK, Bristol-Myers.

  • Man:

    Yes, Senator.

  • Sen. Charles Grassley, R-Iowa:

    Johnson & Johnson.

  • Woman:

    Yes.

  • Sen. Charles Grassley, R-Iowa:

    Merck.

  • Kenneth C. Frazier:

    Yes.

  • Sen. Charles Grassley, R-Iowa:

    Pfizer.

  • Man:

    Absolutely.

  • Sen. Charles Grassley, R-Iowa:

    And Sanofi.

  • Man:

    Yes.

  • John Yang:

    The executives all said they were willing to do more to make sure people could afford the drugs they need, but offered few details.

    They said middlemen were to blame, and that developing new medicines requires billions of dollars in research.

  • Pascal Soriot:

    Our company is dedicated to science and innovation. And in 2018, we invested nearly $6 billion in research and development.

  • Kenneth C. Frazier:

    We're proud to have deployed 70,000 doses of our experimental Ebola vaccine in the Congo.

  • Jennifer Taubert:

    We focus on discovering and developing transformational medicines for some of the world's most challenging diseases, including multiple myeloma, prostate cancer, HIV, schizophrenia, and Crohn's disease, among others.

    Janssen invested $8.4 billion in research and development last year in the search for medical breakthroughs.

  • John Yang:

    Democrat Maria Cantwell of Washington state pressed the executives to acknowledge that the government could help bring prices down.

  • Sen. Maria Cantwell, D-Wash.:

    I'm asking a really basic question, like the VA's ability to negotiate on drug prices. Do you think that states having that same ability drives down price?

  • Kenneth C. Frazier:

    I would say that the VA would get a lower price and the states would get a lower price if you're willing to go into an environment where that could be imposed by the states.

  • Sen. Maria Cantwell, D-Wash.:

    Or the federal government?

  • John Yang:

    The hearing comes as President Trump targets drug costs. He's proposed ending Medicare and Medicaid rebates to middlemen and cutting the price Medicare pays for some drugs.

  • Donald Trump:

    At long last the drug companies in foreign countries will be held accountable for how they rigged the system against American consumers.

  • John Yang:

    Today, senators threatened congressional action. Several zeroed in on Richard Gonzalez, CEO of AbbVie, the maker of Humira. It's the bestselling drug in the world used for rheumatoid arthritis and other diseases, yearly sales nearly $20 billion.

    Over the last six years, the drug's price has doubled to $38,000 a year. More than 100 AbbVie patents and deals with other drug makers mean that lower-price competitors will not hit the U.S. market before 2023.

  • Sen. John Cornyn, R-Texas:

    How many patents? I'm sorry.

  • Richard Gonzales:

    One hundred and thirty-six.

  • Sen. John Cornyn, R-Texas:

    One hundred and thirty-six patents on one drug?

  • Richard Gonzales:

    But, well, remember, Humira is like nine different drugs or 10 different drugs.

  • Sen. John Cornyn, R-Texas:

    I thought you said to Senator Stabenow it was the same molecule.

  • Richard Gonzales:

    It is the same molecule, but it treats different condition, and if you look at that patent portfolio…

    (CROSSTALK)

  • Sen. John Cornyn, R-Texas:

    So, you use the same molecule to treat different conditions, you can get a patent on that treatment?

  • Richard Gonzales:

    Certainly.

  • Sen. John Cornyn, R-Texas:

    Mr. Chairman, I know this topic is the subject of — or within the jurisdiction of the Finance Committee, but those of us like you and me who are also on the Judiciary Committee that has jurisdiction over the patent system, I think this is an area that we need to look in through our Judiciary Committee authority.

  • John Yang:

    Senator Ron Wyden of Oregon, the panel's top Democrat, asked Gonzalez if his compensation, which was $22 million in 2017, is tied to Humira sales.

  • Sen. Ron Wyden, D-Ore.:

    Would you make a smaller bonus if you dropped the price of Humira?

  • Richard Gonzales:

    Humira was one element of a set of financial factors that were evaluated as part of my compensation. It's obviously a very significant product for us, so it's clear that it would be part of that evaluation.

  • Sen. Ron Wyden, D-Ore.:

    I would like that in writing within 10 days.

  • John Yang:

    Some CEOs, like Merck's Ken Frazier, said they were willing to do things like eliminating discounts that help protect their market share, but, overall, companies defended their practices.

  • Kenneth C. Frazier:

    No one company can unilaterally lower list prices without running into financial and operating disadvantages.

  • John Yang:

    By the hearing's end, Wyden and other lawmakers said they were far from satisfied.

  • Sen. Ron Wyden, D-Ore.:

    I have heard a lot of happy talk this morning.

  • John Yang:

    Today's hearing featured more bipartisan criticism than in the past, but it is far from clear what action Congress will take as drug prices continue to rise.

    For the "PBS NewsHour," I'm John Yang.

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