U.S. House Committee on Oversight and Reform Releases Report on Price Fixing Investigations
On December 10, 2021, the U.S. House of Representatives’ Committee on Oversight and Reform released a staff report detailing the results of their multiyear investigation into U.S. drug pricing. The report found numerous drug companies raising prices “with abandon, especially when they succeed in delaying or blocking competition”. The report included internal documents revealing that manufacturers have raised prices specifically to meet ever-increasing revenue targets, which were often tied to higher executive bonuses, and efforts to shut down competition from the generic-drug industry by using anti-competitive strategies. As an example of just one of the categories of drugs investigated, the committee found that Eli Lilly, Novo Nordisk and Sanofi, makers of insulin, targeted the United States for price increases, causing Medicare to lose out on more than $16 billion in savings. Other drug companies investigated include Celgene and Bristol Myers Squibb (for Revlimid, which treats multiple myeloma and other forms of cancer), Teva (for Copaxone, a drug used to treat multiple sclerosis), Amgen (for Enbrel, which is used to treat rheumatoid arthritis and other inflammatory diseases, and for Sensipar, which is used to treat the effects of kidney failure and parathyroid cancer), Novartis (for Gleevec, a drug for treating chronic myeloid leukemia as well as other cancers and rare diseases), and Mallinckrodt (for H.P. Acthar Gel, a drug used to treat a rare infant seizure disorder and other autoimmune and inflammatory disorders).
In September and October of 2020, the House Committee on Oversight and Reform held a series of hearings in a wide-ranging investigation into the skyrocketing prices of prescription drugs. Top executives from Celgene, Bristol Myers Squibb, Teva, Amgen, Novartis, and Mallinckrodt were called to testify about unsustainable price increases. In conjunction with the testimony, the Committee released reports from a review of internal company emails and presentations gathered in the investigation, often contradicting the pricing justifications that the drug manufacturers have delivered to lawmakers and consumers.
The investigation uncovered new details about the specific tactics drug companies are using to raise prices, maximize profits, and suppress competition. The Committee found that drug companies are taking advantage of the federal law that prohibits Medicare from negotiating lower prices directly with drug companies, and that internal company documents show that manufacturers’ claims that price increases are due to rebates and R&D costs are pretextual. For example, internal communications show that pricing decisions made by Celgene, and later Bristol Meyers Squibb, executives were driven almost exclusively by the need to meet company revenue targets and shareholder earnings goals, leading directly to higher executive bonuses.
The U.S. patent system was found to have regularly been manipulated by drugmakers, allowing brand name drug companies to extend their monopolies. Teva, AbbVie, Sanofi, and Pfizer were all found to have engaged in product hopping schemes. For example, in 2018, Pfizer launched a controlled-release version of its blockbuster pain management drug Lyrica. Although Pfizer asserted publicly that the controlled-release version was more convenient for patients than the prior formulation, internal company documents obtained by the Committee described it as an “anchor” to the company’s life-cycle management for Lyrica.