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Big pharma says it can’t drop drug list prices alone


 

REPORTING FROM SENATE FINANCE COMMITTEE HEARING

Top pharmaceutical executives expressed willingness to lower the list prices of their drugs, but only if there were cooperation among all sectors to reform how drugs get from manufacturer to patient.

Kenneth Frazier, chairman and CEO of Merck, testified before the Senate Finance Committee Feb. 26. Courtesy Senate Finance Committee

Kenneth Frazier, chairman and CEO of Merck, testified before the Senate Finance Committee Feb. 26.

That theme was common in the testimony of seven pharmaceutical executives before the Senate Finance Committee during a Feb. 26 hearing.

“We are in a system that used to be fit for purpose and really drove enormous savings over the last few years but it is no longer fit for purpose,” Pascal Soriot, executive director and CEO of AstraZeneca, testified before the committee. “It’s one of those situations where nobody in the system can do anything, can fix it by themselves.”

The problem, the executives agreed, is the financial structure of drug delivery that ties list prices and their associated rebates to formulary placement.

“If you went back a few years ago, when we negotiated to get our drugs on formulary, our goal was to have the lowest copay by patients,” Kenneth Frazier, chairman and CEO of Merck, testified before the committee. “Today, the goal is to pay into the supply chain the biggest rebate. That actually puts the patient at a disadvantage since they are the only ones that are paying a portion of the list price. The list price is actually working against the patient.”

When asked why the list prices of prescription drugs are so high, Olivier Brandicourt, MD, CEO of Sanofi, said, “We are trying to get formulary position with those high list price-high rebate. It’s a preferred position. Unfortunately that preferred position doesn’t automatically ensure affordability.”

Mr. Frazier added that if a manufacturer brings a product “with a low list price in this system, you get punished financially and you get no uptake because everyone in the supply chain makes money as a result of a higher list price.”

Executives noted that when accounting for financial incentives such as rebates, discounts, and coupons, net prices for pharmaceuticals have actually come down even as list prices are on the rise to accommodate competition on formulary placement.

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