Invoking Fifth Amendment protection against self-incrimination during a House hearing on high drug prices, former Turing Pharmaceuticals AG chief Martin Shkreli was excused by U.S. House Committee on Oversight and Government Reform Chairman Jason Chaffetz (R-Utah), leaving Chaffetz and other furious representatives to question Turing's chief commercial officer, Nancy Retzlaff, who fought a losing battle to convince them that patient issues accessing Daraprim (pyrimethamine) had nothing to do with Turing's historic increasing of its price.
Enraged by Shkreli, who left the hearing only to sting its members by calling them "imbeciles" on Twitter shortly thereafter, representatives aggressively questioned Retzlaff and Howard Schiller, interim CEO of Valeant Pharmaceuticals International Inc., over the reasoning behind recent drug price increases at both companies. (See BioWorld Today, Dec. 11, 2015.)
The lawmakers nominally assembled to get to the bottom of how Turing could justify raising the price of Daraprim, a treatment for toxoplasmosis used by patients with HIV/AIDS and cancer, by more than 5,000 percent while exploring similar concerns over Valeant drugs. But general anger over the rising cost of prescription medicines and an indignant disbelief over industry pledges to improve the situation dominated the hearing.
Despite an October email from Retzlaff obtained by the committee in which she acknowledged Daraprim's price as the cause of issues in-patient hospitals, such as Massachusetts General Hospital, were having with Daraprim, she repeatedly insisted during the hearing that most patients paid only pennies per pill under patient access programs and other schemes rather than the $750 per pill cost born by insurers and other payers.
Access troubles instead had more to do with distribution issues the company inherited, Retzlaff said, a stance that ultimately led committee members to label Turing an "exploitation machine," a "shell company" and worse. Toward the end of the tense hearing, Chaffetz even went so far as to accuse Retzlaff of lying while under oath for not including profit on the list of motivations for raising Daraprim's price.
Rep. Elijah Cummings (D-Md.), ranking member of the committee, catalyzed the anger in the hearing room, at one point yelling at Valeant's Schiller that "I want people watching this to be told they are not being ripped off!" Schiller responded by saying that Valeant has looked across its portfolio, taking a 10 percent reduction in two of its largest business units, its dermatology division and its opthalmology division, and reducing the prices of heart medications Isuprel (isoproterenol) and Nitropress (nitroprusside) by 30 percent, after having raised their prices by 525 percent and 212 percent, respectively. He also noted that the company had increased funding for its patient access program. "We have made mistakes," he said. "We grew very quickly. We're acknowledging those mistakes. We're going to change."
Valeant shares (NYSE:VRX) rose $2.72 to close at $96.91 on Thursday, a day the Nasdaq Biotechnology index held steady, rising about 0.3 percent to close at $2,768.76.
Drivers for substantive change, however, may be lacking. "Today there is no chance of federal legislative action on drug pricing, and we do not see regulators trying to force action," wrote Evercore ISI managing director Terry Haines, the firm's senior political strategist, head of political analysis and a former government staffer.
Although action is brewing in the states, with state attorneys general becoming ever more involved in the drug pricing debate, Haines wrote that no congressional action on drug pricing regulation would arrive in 2016 beyond "political posturing," he noted, Congress is likely to want to better understand the relationship between drug pricing and industry research and development before even contemplating action. "Nothing happens on drug pricing in 2016 except political posturing in an election year designed to make drug pricing regulation a political wedge issue," he said.
Making the point, Hillary Clinton issued a trio of comments on the subject Thursday, reprising her role as writer of the industry's most feared Twitter account. The former secretary of state and current Democratic presidential candidate wrote, "As president, I would put an end to drug companies holding families hostage for profit."
She also called Shkreli's and Schiller's testimony another reminder that "price gouging is reprehensible and we need to stop it."
As the main representative of research-based drug companies a class in which Retzlaff cast Turing while testifying the Biotechnology Innovation Organization didn't even wait for the hearing's arrival to jump into its path. On Wednesday, it released a new set of industry-endorsed commitments to support what it called "comprehensive and sustainable solutions to improve patient access to and affordability of innovative medicines."
In the two-page document, BIO said the group and its member companies were committed to advocating for improvements to insurance coverage, patient assistance and safety net programs and to driving "smarter spending" within the health care system through value-based and outcomes-based contracting arrangements evidencing an embrace of the value-based care models payer are pushing globally.
The organization said it was also committed to working with policy-makers and other stakeholders to remove legal barriers, including those getting in the way of "value-based communications and contracting approaches."
A MUCH LARGER PUZZLE
The National Community Pharmacists Association, another vocal stakeholder in the debate and one often at odds with the pharmacy benefit management (PBM) industry, also commented on the thorny issues discussed Thursday. "The current business climate seems to be one in which market power is increasingly concentrated in an ever-shrinking number of corporate entities," it said. Shortfalls in transparency allow PBMs "to collect lucrative rebates from pharmaceutical manufacturers and 'mark up' the cost of medication, charging the health plan more than the pharmacy is reimbursed," the group said.
Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, an association of PBMs, defended his contingent by painting a different picture, in which PBMs "drive significant savings on expensive drugs," saving payers billions of dollars by negotiating substantial discounts with drug manufacturers, such as those making pricey hepatitis C therapies. (See BioWorld Today, Sept. 28, 2015.)
Though only speaking briefly during the live portion of the House hearing, which lasted nearly four hours, Merritt was one of the few voices in the hearing to acknowledge the complexity of the issues under its consideration.
"The pricing tactics we're here to discuss today are just one piece of a much larger puzzle," he said. "They highlight how you can't separate drug company pricing strategies from marketing strategies to promote those drugs. Many drug companies use marketing strategies to reduce awareness and resistance to higher prices, the higher prices that ultimately increase the cost of care."
At the day's end, Shkreli took to the video chat site Blab.im, inviting members of Congress to chat with him about drug prices on his terms, not under oath. At press time, no lawmakers had showed.
Strumming his guitar and taking stock of his trip to Washington, Shkreli said, "I had a weird day."