Sen. Bernie Sanders, left, appears at a news conference with Sen. Ed Markey about issuing subpoenas for drug company CEOs to testify about drug prices, on Capitol Hill, Jan. 25, 2024.
Bill Clark | Cq-roll Call, Inc. | fake images
Senators will question the CEOs of Johnson and Johnson, merck and Bristol-Myers Squibb on U.S. drug prices at a hearing Thursday, as lawmakers on both sides of the aisle work to rein in high health care costs for Americans.
The push to lower drug prices is one of those rare hot-button issues that unites the two major political parties, even though they often endorse different approaches.
According to a federal survey, approximately 9 million American adults did not take their medications as prescribed in 2021 due to the high cost of them. Prescription drug prices in the U.S. are also more than 2.5 times higher than those in other high-income countries, another federal report showed.
The Senate Health, Education, Labor and Pensions Committee says that's especially true for some of the top drugs from J&J, Merck and Bristol Myers Squibb.
The committee hearing will begin at 10 a.m. ET and will include testimony from J&J CEO Joaquin Duato, Merck CEO Robert Davis, and Bristol Myers Squibb CEO Chris Boerner. Duato and Davis initially declined to appear.
Before the hearing, the committee noted that the three companies make some of the most expensive drugs sold in the U.S.: Merck's immunotherapy drug Keytruda, Bristol Myers Squibb's blood thinner Eliquis and J&J's immunosuppressant drug Stelara.
Sen. Bernie Sanders, who chairs the Senate Health panel, hopes the hearing can bear fruit for Americans, especially after Eli Lilly's CEO vowed not to raise prices on the company's insulin products during a similar hearing in May.
A Merck spokesperson told CNBC in January that the company hopes “this will be a productive hearing aimed at improving the committee's understanding of the pharmaceutical industry and finding common-sense solutions to the challenges patients face.”
A J&J spokesperson told CNBC in January that the company hopes to “develop an understanding of our long-standing efforts to improve affordability and access to medicines.”
A Bristol Myers Squibb spokesperson did not immediately respond to a request for comment before the hearing.
Annual drug costs, launch prices and patents.
In a report released Tuesday, the Senate committee said the current annual cost of Keytruda is $191,000 in the United States, but significantly lower in Germany, at $89,000, and in Japan, at $44,000.
The panel report cited drug pricing and reimbursement data from NAVLIN, a drug pricing database. The costs reflected are the list prices of the drugs before insurance and other reimbursements.
The report also noted that Keytruda's annual cost has increased over time: It was $147,000 in 2015, the first full year the drug was on the market.
Meanwhile, the current annual cost of Eliquis is $7,100 in the United States, but just $940 in Japan and $770 in Germany, according to the report. Bristol Myers Squibb began selling the treatment in 2013 for $3,100 in the United States and $1,000 in Japan.
The report says that the current annual cost of Stelara is $79,000 in the United States, while in Japan it is $14,000 and in Germany it is $30,000.
The three drugmakers “begin by setting exorbitant prices for new drugs,” the panel wrote in its report. “Then, as patients become dependent on these medications, these companies raise prices, forcing patients to pay more or abandon ongoing treatment.”
The report also highlighted strategies that the committee said J&J, Merck and Bristol Myers Squibb have been using to “preserve their pricing power by any means necessary.” That includes filing more patents on the same drug to extend its exclusivity, preventing cheaper imitators from entering the market.
Merck holds 64 active patents and 51 pending patents on Keytruda, according to the report, which cites a database called I-MAK Drug Patent Book.
Johnson & Johnson currently has 15 active patents and 21 pending patents on Stelara. Meanwhile, Bristol Myers Squibb holds 18 active patents and two pending patents on Eliquis.
List prices are also increasing for new drugs launched by the three companies, according to the report.
From 2004 to 2008, the average launch price of new prescription drugs sold by J&J, Merck and Bristol Myers Squibb was more than $14,000. But over the past five years, the average launch price of new drugs sold by those companies was more than $238,000.
The report also says J&J and Bristol Myers Squibb each spent $3.2 billion more on stock buybacks, dividends and executive compensation than on research and development to find new drugs in 2022. Merck, however, spent less on executive compensation than in R&D that year, according to the report.
In particular, some of the three companies' top drugs will be subject to the first round of Medicare drug price negotiations, a key policy under the Inflation Reduction Act that aims to make expensive drugs more affordable for old people. That includes Eliquis, Stelara and Januvia, Merck's diabetes drug.
J&J, Merck and Bristol Myers Squibb are suing to stop the negotiations, which will set new prices that will take effect in 2026.
Don't miss these CNBC PRO stories: