Tomorrow, three prominent pharmaceutical company CEOs will testify before the Senate, including Johnson & Johnson. The hearing held by the Senate Health Committee is to discuss the astronomically high prices Americans are forced to pay for critical medications for chronic illnesses.
Undoubtedly, testimony will touch on the pending lawsuits filed by the same companies to halt federally mandated Medicare negotiations with the companies to lower said drug prices. Thanks to the Inflation Reduction Act, Medicare has been given the authority to negotiate the prices down for essential medications, much to the ire of big Pharma.
The best way to understand the issue of sky-high medication costs for Americans and the pending litigation over Medicare negotiations is to flashback to late last year when Congressman Ro Khanna grilled Johnson & Johnson Assistant General Counsel Aviva Wein.
Making bank
Late last year, Aviva Wein, the assistant general counsel for Johnson & Johnson, testified before Congress on the issue of lowering drug prices for Americans. Ms. Wein didn’t bank on Congressman Ro Khanna coming with some hard numbers and what should’ve been an easy question for her to answer.
Congressman Khanna used the leukemia medication Imbruvica to prove a point about the staggering cost of critical medication for blood cancer. Unsurprisingly, Ms. Wein didn’t know the details of how much Imbruvica costs, but Congressman Khanna was able to educate her.
He laid out that the cost of one tablet of Imbruvica costs $484 which equates to roughly $14,000 per month of medication. For one year of medication, it costs a blood cancer patient $160,000.
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When asked, Ms. Wein could not provide the overall profits that has brought her employer, but again Congressman Khanna did not disappoint. He explained that Johnson & Johnson has made $22 billion off of Imbruvica over the last ten years.
Overall, for 2023, Congressman Khanna let Ms. Wein know that the company she represents made $65 billion. After laying out how well Johnson & Johnson does off of Imbruvica, things got interesting.
A simple question
Johnson & Johnson, among other pharmaceutical companies, is suing the federal government over the Inflation Reduction Act’s requirement that Medicare try to negotiate down the price of medications just like Imbruvica. The lawsuit from Johnson & Johnson claims that this negotiation constitutions an “unjust taking.”
The lawsuit is referencing the Fifth Amendment’s ‘Takings Clause’ which states:
“Nor shall private property be taken for public use, without just compensation.”
Essentially, the argument is the federal government is taking medications like Imbruvica from the company that creates it to give to the public without providing appropriate payment. Remember, Johnson & Johnson currently makes $160,000 a year per blood cancer patient who purchases their medication.
Congressman Khanna asked Ms. Wein:
“Do you believe when the Veterans Administration negotiates for drug prices with you that that is a violation of the Takings Clause?”
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Just as with every question Congressman Khanna asked, Ms. Wein could not answer. To which Congressman Khanna rightly pointed out the absurdity of her inability:
“You’re here, you’re the assistant general counsel for a company accusing the US government of taking your property because we’re negotiating drug prices, and you can’t answer a simple question…”
Sounds like an awful lot like any other Congressional hearing on any other topic.
The point
Tomorrow, Merck, Johnson & Johnson, and Bristol Myers Squibb’s CEOs will testify at the Senate Health Committee hearing on drug prices. While the CEO of Bristol Myers Squibb had freely accepted his invitation to testify, it took the threat of subpoena for the CEOs of Merck and Johnson & Johnson to agree.
Had the Senate Health Committee issued the subpoenas, it would’ve been the first time in 40 years since the committee has had to use such a tactic. Of note, the following medications are on the list for negotiation with Medicare:
- Merck’s diabetes drug Januvia
- Johnson & Johnson’s blood cancer treatment drug Imbruvica
- Myers Squibb’s blood thinner Eliquis
The issue isn’t just that these drugs are expensive and have a significantly higher negative impact for those on Medicare specifically. The point is that it is more expensive to purchase just about every medication 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
- Johnson & Johnson’s psoriasis drug Stelara list price is $79,000 in the United States – $16,000 in the United Kingdom
- Myers Squibb’s Eliquis list price is $7,100 in the United States – $650 in France
Why is it so expensive for Americans suffering from chronic illness to purchase the medications they need than it is for the French and the British? Why is it an issue for Medicare to negotiate for lower prices than for the VA?
My money is that none of those questions will be answered tomorrow, but they both deserve an answer. But one thing is certain: it wasn’t long ago that these same companies, in particular Johnson & Johnson, were hailed as heroes for pushing through an experimental vaccine.
The political elite have short memories; let’s hope those who elected them in their seats remind them of the long-fought battle with big Pharma.
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