House Oversight Lawmakers Commit to Bipartisan Action to Hold Big Pharma Accountable During Explosive Hearing on Out-of-Control Drug Prices
During a hearing Tuesday before the U.S. House Committee on Oversight and Reform, the CEO of AbbVie, the manufacturer of the world’s best-selling drug Humira, was put squarely on the hot seat as lawmakers drilled down on the company’s anti-competitive practices and egregious price hikes. Under fire, CEO Richard Gonzalez made several admissions Big Pharma usually tries to avoid, including confirming that generic and biosimilar competition work to lower prices and that brand name drug companies game the patent system to extend monopolies and maintain “pricing power.”
In advance of the hearing, Committee Chairwoman Representative Carolyn Maloney (D-NY) released a report outlining the egregious nature of AbbVie’s pricing and marketing tactics around two of the company’s best-selling products – rheumatoid arthritis drug Humira and lymphoma drug Imbruvica.
In an exchange with Congressman Peter Welch (D-VT) during the hearing, Gonzalez confirmed AbbVie’s patent strategy is designed to maintain monopoly status on products in the company’s portfolio in order to “maintain pricing power” — or in other words, repeatedly increase prices and boost profits:
Representative Peter Welch (D-VT): “You do constant analysis internally within the company to anticipate competition that may result in lower prices, or price competition, correct?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “No. What I’d say we do is we constantly look for ways we can innovate a product so that we can protect and grow its position by making it a better product for patients.”
Representative Peter Welch (D-VT): “And so what that means is extending patent protection to maintain pricing power through the monopoly that a patent confers. Is that correct?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “Yes, it can result in that. Yes.”
During the same exchange, Gonzalez also admitted that competition in the market is effective in lowering prescription drug prices:
Representative Peter Welch (D-VT): “When biosimilar competition was introduced in Europe, the price of your product Humira went down by 80 percent, is that correct?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “The average reduction in revenue was around 50 percent. 48 percent I believe is the last number.”
Representative Peter Welch (D-VT): “Point here is competition works, correct?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “That is correct.”
Gonzalez also noted that there is downward pressure on prices in international markets but bragged on Big Pharma’s ability to get away with price hikes in the United States:
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “Certainly outside the U.S. there is always pressure on price and prices do come down somewhat outside the U.S. once a product is launched and, in the U.S., we do have the ability to be able to raise price.”
Representative Ro Khana (D-CA) exposed the flimsiness of Big Pharma’s tired arguments about innovation driving the industry’s practices in an exchange with Gonzalez:
Representative Ro Khanna (D-CA): “Mr. Gonzalez, can you tell us who invented the fully human monoclonal antibody?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “Uh, it was invented as part of Knoll, when we acquired Knoll, back in two thousand and uh…?”
Representative Ro Khanna (D-CA): “Do you know who it was?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “I don’t know”
Representative Ro Khanna (D-CA): “You don’t know who invented your biggest drug? It was Gregory Winter. Do you know who he is?
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “Uh, no.”
Representative Ro Khanna (D-CA): “He actually won the Nobel Prize in chemistry for the invention. You know what he had to say about Humira? He said, ‘I must not be a very good businessperson because I didn’t make the billions, all the other people made the billions. Now, you know, you stand here saying you’re for all this innovation, you believe in innovation, and you don’t even know who the Nobel Laureate was who invented the drug that you’re profiting from. Isn’t there some disconnect there?”
Richard Gonzalez, Chairman of the Board and Chief Executive Officer, AbbVie Inc: “What we focus our attention on is trying to create new innovation that helps patients.”
Representative Ro Khanna (D-CA): “How can you say you’re creating new innovations when you don’t even know the Nobel Laureate who came up with the innovation for Humira? Doesn’t that show that what you’re really doing is business. Let’s just be honest about it as opposed to thinking that you’re doing an innovation when you don’t know the person who invented the drug that you’re profiting off.”
During the hearing, lawmakers in both parties slammed the egregious practices of AbbVie and Big Pharma and called for solutions to hold drug companies accountable and lower prescription drug prices.
Representative Carolyn Maloney (D-NY): “Drug prices in the United States are unfair, unsustainable and just plain wrong… Our investigation has revealed that the justifications the pharmaceutical industry offers for why they need to raise prices simply do not hold water… Our investigation also uncovered evidence that AbbVie has exploited the U.S. Patent System and engaged in anti-competitive practices to extend its monopoly pricing. The committee has obtained internal documents showing that AbbVie’s own executives projected its top-selling drug Humira would face competition from lower-priced versions of the drug, known as biosimilars, beginning in 2017. But AbbVie used legally questionable tactics to block lower-priced biosimilars from reaching American consumers until at least 2023. Those tactics made AbbVie a fortune but cost Americans dearly.”
Representative James Comer (R-TN): “…There are companies that have abused our patent system, seeking hundreds of patents to prolong their ability to control the market for a particular treatment… While seeking undress of patents on a medication or vaccine is not illegal under our existing system, it can be anti-competitive and result in higher costs for patients… We must address rising prescription costs because high costs are hurting American families everywhere.”
Representative Gerry Connolly (D-VA): “According to your own internal projections the U.S. market would have saved $19 billion and instead the U.S. patients will not have access to lower price biosimilars until 2023. Why would you account for the 80 percent difference in the price of Humira between Europe and the United States? Other than lack of competition? And by the way, unlike what Mrs. Fox suggested, it clearly isn’t about recouping R&D costs, it’s about lack of competition in the market.”
Representative Clay Higgins (R-LA): “Mr. Gonzalez I find myself very much aligned with my colleagues across the aisle, which I’m hoping that my friends will mark on the calendar. You’ve been under tremendous pressure today and sir, it’s about to get worse. How can you defend American prices of pharmaceuticals overseas versus prices on drugs in the nation that you love? You enjoy the protections and the benefits of America. You benefit from the tax cuts and jobs act that I worked very hard on and that my party pushed through. But your answers to the chair were evasive at best and appeared to be obviously written by attorneys. Please just explain to America how the hell can you explain the prices overseas of the drugs you manufacture in America, develop in America, that are so much higher for American citizens and patients than they are overseas?”
Representative Debbie Wasserman Schultz (D-FL): “As a breast cancer survivor, the exceptionally high cost of cancer drugs is an issue where the policy is very personal for me… Despite what Big Pharma wants you to believe, they bear responsibility for our current crisis of cancer drug affordability. No one should be unable to afford life-saving medications, but 42 percent of cancer patients deplete their entire net worth – I’ve talked with countless of them – within the first two years of treatment, in part, due to high drug prices. We can have both innovative treatments and affordable prices and we all deserve both. We shouldn’t have to make the false choice. Congress should reject that false choice and act now to rein in the era of the greed of pharmaceutical companies. We have to make sure that if you are facing a life-or-death condition that you are not faced with having to bankrupt yourself in order to be able to afford to stay alive.”
Representative Glenn Grothman (R-WI): “It does alarm me that people in other countries pay so much less for drugs than this country and they just, flat-out that should be wrong… It seems ridiculous on its face that Americans have to pay so much for drugs than other countries.”
Representative Katie Porter (D-CA): “So, AbbVie took zero risk to develop this drug. You bought it knowing it would be profitable. You hiked the price to pay for R&D but you haven’t made the drug any better even as you doubled the cost?”
Representative Andrew Clyde (R-GA): “In the four-plus months that I’ve held office, one of the top issues to repeatedly arise in many of my meetings with constituents in Georgia’s Ninth Congressional District is the high cost of prescription drugs – many of which are life-saving medicines. This is an issue that I think all of us sitting in the committee have the desire to address.”
Read more on the example of AbbVie’s Humira as a case study on Big Pharma’s egregious practices HERE.
Read about AbbVie’s first-quarter earnings after hiking drug prices during the pandemic HERE.
Learn more about market-based solutions to hold Big Pharma accountable and lower prescription drug prices HERE.