WASHINGTON — The CEOs of three big drug companies — Johnson & Johnson, Merck and Bristol Myers Squibb — sat before Senators on Thursday, answering questions about why Americans pay more for prescription drugs than residents of every other country in the world.

“Folks want real answers. They want relief from high prices,” said Sen. Bill Cassidy, R-Louisiana. 

What You Need To Know

  • Three drug company CEOs testified before lawmakers Thursday about high drug prices in the U.S.

  • A report shows one Johnson & Johnson drug costs $79,000 per year in the U.S. and $20,000 in Canada

  • The CEOs said Americans get lifesaving medication faster than people in other countries

  • Sen. Baldwin believes drug companies should be more transparent when increasing drug prices

A report issued by the Senate Health, Education, Labor and Pensions (HELP) committee shows a Johnson and Johnson’s drug called Stelara costs $79,000 per year in the U.S., compared to $20,000 in Canada.

“So you don’t identify any free-rider syndrome today, in which the United States is paying higher prices, allowing other nations to receive lower prices?” Sen. Chris Murphy, D-Connecticut, asked Joaquin Duato, the CEO of Johnson & Johnson. 

“The real difference is that in the U.S., patients get access to therapy–lifesaving therapy–years before they do in the countries that you mentioned,” Duato replied. 

The CEOs also said that prices are high in the U.S. to support drug research and development, so drugmakers can continue to create life-saving medications. 

“There is a reason why the prices are different,” said Robert Davis, the CEO of Merck. “And we need to be careful because we are also seeing, in those markets, that they are unwilling to support the innovation, and we are [working hard] to try to get them to understand the need.” 

Still, lawmakers questioned why the drug companies spend billions of dollars per year on stock buybacks and executive compensation, instead of putting that money toward research or lower costs.

“I have a constituent who literally turns down the heat in the winter because that’s how she is able to afford the prescription drugs she needs,” said Sen. Tammy Baldwin, D-Wisconsin.

Sen. Baldwin said Congress needs to force drug companies to be more transparent. She’s pushed legislation called the FAIR Drug Pricing Act that would require manufacturers to submit a justification report to the U.S. Department of Health and Human Services (HHS) when they sharply increase the price of a drug. And while part of the Inflation Reduction Act of 2022 allows Medicare to negotiate lower prices of 10 different drugs, Sen. Baldwin said that’s not enough. 

“One of the reasons why prices are so much lower overseas is those countries negotiate a better price. Our country doesn’t,” Baldwin said. “So, we have started that process, and I think that will have a significant impact… We need to ramp up the number of medications that are subject to negotiation, but that is in the works.” 

The CEOs also blamed pharmaceutical benefit managers for high costs, since they’re the middlemen negotiating drug costs with insurers. Sen. Baldwin said that’s an effort to dodge responsibility, saying that drug manufacturers ultimately set the list prices for their medications. 

“The finger-pointing… they’re just trying to shed the blame,” Baldwin said.

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