Senate Questions CEOs of Merck, J&J, and Bristol Myers Squibb on Exorbitant Drug Prices in the U.S.
In a rare display of bipartisan unity, senators from both sides of the aisle are questioning the CEOs of Johnson & Johnson, Merck, and Bristol Myers Squibb on the exorbitant drug prices in the United States. The Senate Health, Education, Labor and Pensions Committee is holding a hearing to address the issue of high healthcare costs for Americans and the impact it has on their ability to afford necessary medications. This comes as a federal survey revealed that approximately 9 million American adults did not take their prescribed drugs in 2021 due to the high cost.
Prescription drug prices in the U.S. are more than 2.5 times higher than those in other high-income nations, according to a federal report. The committee highlighted that some of the most expensive drugs sold in the U.S. are manufactured by J&J, Merck, and Bristol Myers Squibb. These include Merck’s immunotherapy drug Keytruda, Bristol Myers Squibb’s blood thinner Eliquis, and J&J’s immunosuppressive medication Stelara.
During the hearing, Senator Bernie Sanders, who chairs the Senate Health panel, emphasized that the pharmaceutical industry benefits significantly from these high drug prices while Americans struggle to afford the medication they need. He expressed hope that the hearing would lead to concrete solutions for Americans, citing Eli Lilly’s CEO’s promise not to raise insulin prices during a similar hearing in May.
The current annual cost of Keytruda is $191,000 in the U.S., which is significantly higher than the prices in Germany ($89,000) and Japan ($44,000). Similarly, Eliquis costs $7,100 per year in the U.S., while it is priced at $940 in Japan and $770 in Germany. Stelara’s annual cost is $79,000 in the U.S., compared to $14,000 in Japan and $30,000 in Germany.
The Senate committee’s report also shed light on the pricing strategies employed by J&J, Merck, and Bristol Myers Squibb to maintain their pricing power. These strategies include filing multiple patents on the same medicine to extend exclusivity and prevent cheaper generic alternatives from entering the market. For example, Merck holds 64 active patents and 51 pending patents on Keytruda, while J&J has 15 active patents and 21 pending patents on Stelara.
The report further revealed that list prices for new drugs are increasing. From 2004 to 2008, the median launch price of new prescription drugs sold by J&J, Merck, and Bristol Myers Squibb was over $14,000. However, in the past five years, the median launch price of new drugs sold by these companies has skyrocketed to more than $238,000.
Additionally, the report highlighted the disproportionate spending on stock buybacks, dividends, and executive compensation compared to research and development (R&D) for new drugs. In 2022, J&J and Bristol Myers Squibb each spent $3.2 billion more on these activities than on R&D. However, Merck prioritized R&D over executive compensation.
Notably, some of the top drugs from these three companies will be subject to the first round of Medicare drug price negotiations under the Inflation Reduction Act. This policy aims to make expensive medications more affordable for seniors. However, J&J, Merck, and Bristol Myers Squibb are suing to halt these negotiations, which would establish new prices effective from 2026.
The hearing serves as a critical opportunity for lawmakers to address the issue of exorbitant drug prices in the U.S. and work towards finding solutions that prioritize affordability and access to necessary medications for all Americans. As the Senate Health, Education, Labor and Pensions Committee delves into this topic, the hope is that it leads to substantive changes in the pharmaceutical industry and ensures that patients can afford the medicines they need without compromising their health and well-being.
