Merck, J&J, Bristol Myers Squibb CEOs face Senate drug price hearing

The CEOs of Johnson & Johnson, Merck and Bristol Myers Squibb defended high drug prices in the U.S. at a Senate hearing Thursday, as the White House and lawmakers on both sides of the aisle work to rein in high health-care costs for Americans.

The push to cut drug prices is one of the rare hot-button issues that unites the two major political parties, though they often back different approaches to reducing costs. The Senate Health, Education, Labor and Pensions Committee hearing comes at a pivotal time, as the Biden administration starts a long-awaited process to negotiate Medicare drug prices directly with manufacturers — which is expected to ease pressure on seniors’ wallets.

At the hearing, Merck CEO Robert Davis and Bristol Myers Squibb CEO Chris Boerner did not commit to cutting the prices of certain drugs in the U.S. to match what they are in other high-income countries, such as Canada and Japan.

But they said they would welcome cheaper copycats into the market when the main patents on each of their top-selling drugs expire. Drugmakers are notorious for using different strategies to extend the exclusivity of lucrative drugs.

J&J CEO Joaquin Duato also committed to lowering the price of its immunosuppressive medication Stelara in 2025, when competing drugs will be allowed to enter the market.

Roughly 9 million American adults did not take their drugs as prescribed in 2021 due to the high cost of medications, according to a federal survey. Prescription drug prices in the U.S. are more than 2.5 times as high as those in other high-income nations, another federal report showed.

The Senate panel said that’s especially true for some of the top drugs from the three drugmakers testifying Thursday, including Merck’s immunotherapy drug Keytruda, Bristol Myers Squibb’s blood thinner Eliquis, and J&J’s Stelara. Eliquis and Stelara are both among the first 10 drugs subject to the Medicare price talks.

“The overwhelming beneficiary of these high drug prices is the pharmaceutical industry,” Sen. Bernie Sanders, who chairs the Senate Health panel, said during the hearing.

The three CEOs acknowledged the high cost of health-care in the U.S, but said their prices reflect the value of their life-saving drugs to patients and the broader health-care system, along with their high investments in research and development. They also claimed that medicines reach patients far faster in the U.S. than they do in other countries, and contended pharmacy benefit managers — middlemen who negotiate drug discounts on behalf of insurers and other payors — often pocket savings instead of passing them down to patients.

“Patients bear the brunt of a complex U.S. system that sees increasing health care costs and a lack of affordability. We have to make the system work better for them,” said Boerner, adding that drugmakers “have a role to play in addressing affordability.” 

But he added that Bristol Myers Squibb supports policies that “lower patient out-of-pocket costs without ultimately harming innovation.” Boerner did not point to specific policies.

Still, a report released Tuesday by the committee claims that J&J and Bristol Myers Squibb each spent $3.2 billion more on stock buybacks, dividends and executive compensation than they did on R&D for finding new drugs in 2022. Merck, however, spent less on executive compensation than on R&D that year, the report said.