Drugmakers Defend Pricing Strategies in San Francisco

Two years ago, fear that Donald Trump would clamp down on drug prices roiled the health industry’s biggest annual gathering.

Now, pushback on prices has become part of a new normal for which many pharmaceutical executives have developed a reliable script: Drug costs should reflect the value treatments deliver to patients, they say. Savings shouldn’t come at the expense of innovation. And the companies they run have been restrained and transparent in taking price increases.

(Related: Trump Goes After Pharma on Twitter as Companies Increase Prices)

In response, the Trump administration and Congress are gearing up for a renewed campaign to bring the companies to heel. The top U.S. health official said Wednesday that prices must come down, while lawmakers prepared to roll out new proposals to limit increases.

Meanwhile, drug costs are marching higher. Days ahead of this week’s J.P. Morgan Healthcare Conference in San Francisco — where a backdrop with a gold capsule and glittering, jewel-like DNA strand was draped behind panelists — pharma companies boosted list prices on hundreds of treatments, including widely used painkillers and cardiovascular drugs.

This week, prices of dozens more medicines were raised, according to the health-information analytics company Elsevier. Among them was Novo Nordisk A/S type-2 diabetes drug Victoza, which was boosted 5.9%. The company said in a statement that it’s kept annual list-price increases below 10%, in accordance with an earlier pledge.

Despite the current spotlight, some executives say the controversy is focused on the wrong issues.

“It’s not a real problem; it’s all politics,” said BioMarin Pharmaceutical Inc. Chief Executive Jean-Jacques Bienaime in an interview on the eve of the J.P. Morgan conference.

Washington has been watching the recent price moves with growing impatience. On Tuesday, Trump summoned his top health officials to the White House to discuss the increases, which he also lashed out at in a weekend tweet. Last year, Trump persuaded some companies to pause planned increases.

Sen. Bernie Sanders, the Vermont independent, and Rep. Elijah Cummings, a Democrat from Maryland, plan to introduce drug-pricing legislation Thursday, according to a person familiar with the matter.

The bills would authorize importation of cheaper drugs from abroad, let Medicare negotiate prescription prices and require the government to list “excessively priced” treatments. The measures also would permit generic-drug companies to sell lower-cost versions of medicines that still have patent protection if branded prices climb too high.

Cummings indicated on Wednesday that there would be public hearings on drug prices.

Industry figures say the price issue is more nuanced than the public debate. Several executives said this year’s increases have been modest. Others said companies should be compensated for taking risks that lead to treatments for once-intractable diseases.

“The price debate goes on, and those who are able to innovate will be rewarded for their innovation,” said Michel Vounatsos, CEO of Biogen Inc. “This is what this country stands for.”

Good Behavior

The Trump administration last year issued a blueprint for lowering pharmaceutical costs. The proposal included indexing drug prices paid by programs like Medicare to what governments in other countries pay. It also asked pharmaceutical companies to include prices in TV ads.

Variations on those ideas have been taken up by some companies. Eli Lilly & Co., which this week agreed to acquire cancer-treatment maker Loxo Oncology Inc. for $8 billion, said it would direct TV-ad viewers to websites with more comprehensive pricing information.

The administration also praised a handful of pharmaceutical giants for cutting prices.

“We’ve seen some good behavior from companies such as Merck, Gilead and Amgen, who announced lower prices for their drugs,” Health Secretary Alex Azar, a former executive of Eli Lilly, tweeted on Wednesday. “We need to see more.”