On May 18, 2021, the United States House of Representatives Committee on Oversight and Reform held a hearing in which it reviewed the pricing and business practices of AbbVie, Inc., with a special focus on Humira and Imbruvica. Present at the hearing were Tahir Amin, Co-Founder and Co-Executive Director of Initiative for Medicines, Access, and Knowledge; Craig Garthwaite, Professor at Kellogg School of Management at Northwestern University; Richard Gonzalez, Chairman of the Board and CEO at AbbVie, Inc; and Dr. Aaron Kesselheim, Professor of Medicine at Harvard Medical School.
Opening Statements
The Hearing, called by Committee Chairwoman Carolyn Maloney, opened with her statement, which highlighted the two-year investigation the Committee has been pursuing with respect to drug prices. Ms. Maloney also referenced the importance of innovation in drug companies but believes that many brand name manufacturers invest in suppressing the competition instead of investing in research and development that can benefit patients.
Ranking Member James Comer discussed the way strong intellectual property protections helped propel the quick development of vaccines and therapies for COVID-19 and raised concerns over a “government takeover” of the pharmaceutical industry.
Mr. Amin called on Congress to take action and change the requirements for what can be patented, as well as change the financial incentives and “culture” at the United States Patent and Trade Office.
Professor Garthwaite referenced “empirical evidence [that] demonstrates that price concessions” found in legislation like H.R. 3 “would almost certainly decrease investments in innovation.” He cautioned that such decrease in investments may result in loss of access for patients with rare and life-threatening conditions. He noted the importance of reforming patent negotiations between branded manufacturers and generic competitors, as well as creating policies that encourage competition for drugs with small patient populations.
Mr. Gonzalez called for a cap on drug spending, noting that patients typically bear too much of the cost of the drug in the Part D program. He also asked that government work together with industry and health care plans to reduce out-of-pocket costs for patients and re-apportion costs in the catastrophic phase so that “spending will be well controlled.”
Dr. Kesselheim opined that the United States needs reform to ensure timely and efficient availability of generic and biosimilar competition following a “reasonable period of market exclusivity.”
Discussion
As the only representative on the panel from a pharmaceutical company, Mr. Gonzalez received much ire from representatives, including Clay Higgins and Katie Porter, who asked how AbbVie could prove that its patents were legitimate, with Rep. Higgins going so far as calling AbbVie’s patents “frivolous” and saying that while the company has a right to make a profit, their profit is not “honest.”
Biosimilar Competition
Representative Gerald Connolly asked by AbbVie’s internal documents showed that they expected Humira biosimilar competition by 2017, but had entered into nine different settlements with potential competitors to delay potential biosimilar competition to 2023. He continued to ask whether AbbVie received any item of value in exchange for delayed entry, which Mr. Gonzalez denied and said that the companies pay AbbVie royalties to access its patent portfolio. Rep. Connolly questioned why the European market had biosimilar competition when the United States did not, and Mr. Gonzalez indicated that the European patent portfolio was different than the United States portfolio.
On that subject, Representative Peter Welch noted that biosimilar competition in Europe lowered Humira’s prices by 80% while Representative Mark DeSaulnier also noted the difference between biosimilar competition in the United States and Europe.
Pricing Policies
AbbVie’s pricing policies were another huge topic of discussion, with Mr. Gonzalez discussing the patient assistance program that provides patients with a full year of prescription drugs and also “subsidizes” the Medicare program, providing free Humira for 40% of Medicare Part D patients.
In questioning by Cori Bush, Mr. Gonzales said that AbbVie would have to lower Imbruvica’s price by 98% to make it affordable for Part D patients, and that indicates a problem with the Part D structure, not necessarily with AbbVie’s prices. He noted that the prices paid for drugs through Part D are aggressively negotiated and that the structure of the program is what dictates the affordability of drugs for patients.
Dr. Kesselheim said it is a frequent misconception that rebates negotiated through PBMs cause higher drug prices, citing to the fact that over the last decade, list prices of drugs have increased by 160% and that higher list prices increase both out-of-pocket costs for patients as well as premiums. Mr. Gonzalez stated that rebates and formulary placement agreements help lower premiums for plan beneficiaries.
Professor Garthwaite opined that the cost sharing that insurance sets for patients is a bigger issue than list prices set by drug manufacturers.
Conclusion
Chairwoman Maloney seems to be continuing Chairman Cummings’ investigation into drug pricing. Which drug pricing legislation gets passed by the House and Senate remains to be seen, but we expect the topic of drug pricing to remain a hot topic for months to come.