Pharma Smackdown on Capitol Hill

February 4, 2016

Valeant and Turing's fuzzy explanations of pricing practices to the House Oversight and Government Reform Committee cast a shadow over the broader industry, writes Jill Wechsler.

Executives from Valeant and Turing had a hard time explaining to members of the House Oversight and Government Reform Committee their rationales for exorbitant price hikes of older drugs in recent months. Their fuzzy explanations of pricing practices, moreover, cast a shadow over the broader pharmaceutical industry.

The central attraction was Turing former CEO Martin Shkreli, who appeared before the Committee as commanded, but smirked through repeated denials to answer questions. Unless you use your current fame to influence drug price reductions, advised Rep. Elijah Cummings of Maryland, ranking Democrat on the panel, “you can go down in history as the poster boy for greedy drug company executives.” Shkreli was dismissed early from the hearing, with a squad of lawyers in tow, tweeting about the “imbeciles” on the panel.  

The remaining executives were pressed repeatedly to explain their pricing decisions, many related to issues raised in lengthy documents from the two firms that were released earlier by the Committee. Valeant interim CEO Howard Schiller admitted that in some price increase decisions “we clearly have gotten it wrong,” and that the firm would no longer troll for old drugs with potential for big price increases [https://oversight.house.gov/wp-content/uploads/2016/02/Schiller-Valeant-Statement-1-26-Prescription-Drugs.pdf ].

Turing “chief commercial officer” Nancy Retzlaff killed off any credibility by claiming that she didn’t know how much stock Shkreli now had in Turing. Equally unpersuasive was her claim that the firm was reinvesting 60% of its profits in R&D. She maintained that patients didn’t have access issues with toxoplasmosis drug Daraprim because the company was covering the $5000 copays and that hospitals didn’t have problems because the company was offering 50% discounts and smaller bottles of 30 pills to keep costs down. [https://oversight.house.gov/wp-content/uploads/2016/02/Retzlaff-Turing-Statement-1-26-Prescription-Drugs.pdf ].

PBMs (pharmacy benefit managers) took some hits for boosting profits while squeezing reimbursement to pharmacies. Mark Merritt, president of the Pharmaceutical Care Management Association (PCMA), tried to make the case for how PBMs can increase market competition and save money for everyone  [https://oversight.house.gov/wp-content/uploads/2016/02/Merritt-PCMA-Statement-1-26-Prescription-Drugs.pdf ]. But committee members aligned with pharmacists charged PBMs for squeezing out small retail pharmacies and profiting from the spread between pharmacy reimbursement and payments to insurers.

The Committee called on Janet Woodcock, director of FDA’s Center for Drug Evaluation and Research (CDER), to respond to calls for faster FDA approval of generic drugs to inject more competition into the marketplace, similar to issues raised last week by the Senate Health, Education, Labor and Pensions (HELP) Committee at a hearing on FDA’s generic drug approval program. Woodcock mapped out how CDER was making great progress in speeding up approvals of “first generics” and whittling down a sizeable backlog in old applications. https://oversight.house.gov/wp-content/uploads/2016/02/Woodcock-FDA-Statement-1-26-Prescription-Drugs.pdf .

She also noted that a small group of innovator drugs that no longer have patent protection still lack generic competition. And she cited a recent HHS study documenting broad decreases in generic drug prices, and a few increases. Even when CDER eliminates the generic drug backlog and achieves its 10-month goal for bringing first generics to market, “there still will be problems for drugs without generic competition,” she observed.

Committee members offered a range of strategies for preventing and addressing extreme price hikes in prescription drugs, besides faster FDA approvals. A “poison pill” policy would allow suspension of product exclusivity on products that experience Turing-like price hikes, proposed Rep. Steven Lynch (D-Mass.), Turing and other bad actors, he said, thus are responsible for causing Congress to impose heavy regulations on good pharmaceutical companies, which could “choke off” good drugs coming through the pipeline.

Others urged greater transparency in pharma pricing on websites, and how much companies actually spend on research. And there was mention of FDA authorizing use of compounded drugs to create more competition, as done in some cases of severe drug shortages, and support for speedy development and market approval of biosimilars.

In fact, Woodcock had to leave the Oversight hearing early to testify before the House Energy & Commerce Health subcommittee on FDA’s progress in developing guidance and setting policies to spur more biosimilar approvals. There’s great hopes for these new products to offset the high cost of many newer biotech therapies, but concerns that reimbursement and coding policies set by Medicare will undermine their acceptance in the marketplace.