Policy
Tomorrow, three top pharmaceutical company CEOs will testify before the Senate, including Johnson & Johnson. The Senate Health Committee hearing aims to address the astronomically high prices Americans are forced to pay for critical medications for chronic diseases.
The testimony will undoubtedly touch on pending lawsuits filed by the same companies to halt federally mandated Medicare negotiations with the companies to lower the prices of said drugs. Thanks to the Inflation Control Act, Medicare was given the power to negotiate lower prices for essential drugs, which infuriated Big Pharma.
The best way to understand the issue of rising drug costs for Americans and the outstanding issues over Medicare negotiations is to flashback to late last year when Congressman Ro Khanna grilled Johnson & Johnson Assistant General Counsel Aviva Wynn.
Making a bank
Late last year, Aviva Wynn, associate general counsel for Johnson & Johnson, testified before Congress on the issue of lowering drug prices for Americans. Ms. Wynn wasn't counting on Congressman Ro Khanna coming in with some hard numbers and what should have been an easy question for her to answer.
Congressman Khanna used the leukemia drug Imbruvica to make a point about the staggering cost of critical blood cancer drugs. Unsurprisingly, Ms. Wynn did not know the details of the cost of Imbruvica, but Congressman Khanna was able to educate her.
One tablet of Imbruvica costs $484, which equates to about $14,000 a month in medication, he said. One year of treatment costs a leukemia patient $160,000.
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When asked, Ms. Wynn was unable to provide the total earnings brought in by her employer, but once again Congressman Khanna did not disappoint. He explained that Johnson & Johnson has made $22 billion from Imbruvica over the past ten years.
Overall, for 2023, Congressman Khanna told Ms. Wynn that the company she represents made $65 billion. After demonstrating how well Johnson & Johnson was doing on Imbruvica, things got interesting.
simple question
Johnson & Johnson, among other drug companies, is suing the federal government over the Inflation Control Act's requirement that Medicare try to negotiate lower drug prices just like Imbruvica. Johnson & Johnson's lawsuit claims these negotiations constitute an “unfair taking.”
The lawsuit cites the Fifth Amendment's “receipt clause” which states:
“Private property may not be seized for public benefit without just compensation.”
Basically, the argument is that the federal government is taking drugs like Imbruvica from the company that makes them to give them to the public without providing proper payment. Remember, Johnson & Johnson currently makes $160,000 a year for every leukemia patient who buys their drugs.
Congressman Khanna asked Ms. Wynn:
“Do you believe that when the VA negotiates drug prices with you, that it is a violation of the takeover clause?”
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As with every question Congressman Khanna asked, Ms. Wynn was unable to answer. Congressman Khanna rightly pointed out the absurdity of her helplessness:
“Here you are, you're the associate general counsel for a company that's accusing the US government of seizing your property because we're negotiating drug prices, and you can't answer a simple question…”
This sounds as terrible as 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 prices. While Bristol-Myers Squibb's CEO accepted his invitation to testify freely, it took threatening to subpoena the executives of Merck and Johnson & Johnson to agree.
Had the Senate Health Committee issued the subpoenas, it would have been the first time in 40 years that the committee had to use such a tactic. It should be noted that the following drugs are on the list for negotiation with Medicare:
- Januvia, a diabetes drug from Merck
- Imbruvica, a leukemia drug from Johnson & Johnson
- Myers Squibb Eliquis blood thinner
The problem is not only that these drugs are more expensive and have a much greater negative impact on people receiving medical care specifically. The point is that almost every drug is more expensive to buy in the United States than anywhere else in the world.
For example:
- Merck's Januvia list price is $6,900 in the United States – $200 in France
- List price of Johnson & Johnson's psoriasis medication Stelara is $79,000 in the US – $16,000 in the UK
- List price for Myers Squibb's Eliquis is $7,100 in the US – $650 in France
Why is it so expensive to buy the medications needed by Americans with chronic diseases compared to the French and British? Why is negotiating lower than VA rates a problem for Medicare?
I guess neither of these questions will be answered tomorrow, but both are worth answering. But one thing is certain: It wasn't long until these same companies, especially Johnson & Johnson, were being hailed as heroes for pushing an experimental vaccine.
The political elite has a short memory. Let's hope those who elected them to their seats remind them of the long battle with Big Pharma.
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