Senator Bernie Sanders is preparing to grill the CEOs of three major pharmaceutical companies.
On Thursday, Joaquin Duato of Johnson & Johnson, Robert Davis of Merck, and Chris Boerner of Bristol Myers Squibb will testify before the Senate Health, Education, Labor, and Pensions (HELP) committee over why the U.S. pays the highest prices in the world for prescription drugs.[time-brightcove not-tgx=”true”]
“Whether you’re Democrat, Republican, independent, conservative, progressive, you know that the pharmaceutical industry is ripping us off,” Sanders, an independent from Vermont, says.
The HELP majority staff released a report on Tuesday that revealed that the median launch price of innovative prescription drugs sold by Johnson & Johnson, Bristol Myers Squibb, and Merck have increased by more than $220,000 from $14,000 in the years 2004-2008 to $238,000 in the past five years. The report also found that Johnson & Johnson and Bristol Myers Squibb spent more money on stock buybacks, dividends, and executive compensation than they did on research and development in the year 2022.
Pharmaceutical Research and Manufacturers of America (PhRMA) spokesperson Sarah Ryan says Sanders is engaging in a “shaming exercise.”
“A small number of senators are focused on a political shaming exercise instead of what will help lower what Americans pay for medicines at the pharmacy. The United States is the only country that allows middlemen to profiteer on medicines, leading to higher costs for patients,” Ryan said in a statement.
TIME spoke to Sanders on Feb. 7 ahead of the hearing about what Congress can do to lower drug prices, what Americans don’t understand about Big Pharma’s business model, and why the Biden Administration should be doing more.
The following interview has been lightly edited and condensed.
TIME: The HELP Committee just released a report on Big Pharma’s business model. And one of the key findings was that for some of the most popular drugs, pharma makes more money off of Americans than the rest of the world combined. Why is that?
Sanders: The reason is that the pharmaceutical industry is an extremely greedy industry. Their goal is simply to make as much money as they possibly can. Every other major industrialized country has—in one form or another—national healthcare programs, which, among other things, guarantees healthcare to all of their people, but also puts them in a position to negotiate the prices of drugs with the companies.
In the United States, up until very recently, the drug companies could charge any price they want for any reason. The result of that is that in some cases, we are seeing the same exact prescription drugs sold in America for more than 10 times what they are sold in Canada, or Europe, or Asia.
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Pharmaceutical companies frequently make the argument that they need to charge these high prices in order to fund the research and development of new drugs. What would you say to pharmaceutical executives who argue that lowering drug prices will hurt innovation?
We want innovation, we want research and development to address many of the terrible illnesses which are afflicting the American people today, whether it is cancer or Alzheimer’s or heart disease. But in instance after instance, what you find is that despite what they say, these companies put more money in stock buybacks and dividends to their shareholders than they do into research and development.
Even when you talk about what we refer to as “research and development,” the average person might assume that they’re working on Alzheimer’s or cancer. Sometimes they are, but often they’re not. They are also working on what we call “me-too” drugs, which are modest modifications of existing drugs so they can get a new patent to extend their monopoly. So it’s not all that it seems to be.
The bottom line is, in the last year, 10 major pharmaceutical companies earned over $110 billion dollars in profit. Year after year these are some of the most profitable companies in America. So I don’t accept the argument that they desperately need these high prices just for research and development.
What can Congress realistically do here?
Congress can do what every other major country on Earth does. And that is, among other things, negotiate prescription drug prices with the industry and not let them charge us anything they want.
There are many other things that we can do. The United States government spends tens of billions of dollars in helping to develop new prescription drugs through the NIH. What we have done in the past is simply give the drug companies the money, and after a good drug is developed, passes FDA approval, then they charge us outrageously high prices.
What we can and must do—what we call ‘reasonable pricing’—is that if the federal government provides assistance to a company to develop a drug, and it’s a successful drug, then the price of that drug must be reasonable here in the United States.
The pharmaceutical industry, which is next to Wall Street, is the most powerful political force in the country. They have right now as we speak 1800 well paid lobbyists here in Washington, D.C., to make sure that Congress does nothing to impact their profit margin. 1800 for 535 lawmakers. On top of that they contribute huge amounts of money to multiple political parties in terms of campaign contributions.
Given the level of power that the pharmaceutical industry has, and given how divided Congress has been, what are you hoping to get out of the Senate hearing on Thursday?
We’re hoping to get two things. Number one, to continue to raise public consciousness on the greed of the industry, and the pain that they are causing so many Americans.
Number two, up until now, since I’ve been chairman, we had managed to get some commitments out of the pharmaceutical industry. Moderna, the manufacturer of one of the two major COVID-19 vaccines in the country, promised to provide that vaccine free at drugstores and community health centers for people who could not afford it, and they’ve kept that commitment. So now there are many people getting free vaccines because we brought the CEO of Moderna before the committee. In another hearing, Eli Lilly, a major manufacturer of insulin products, promised not to raise their insulin prices, after having lowered their prices. And they have kept that commitment as well.
At the end of the day, you’re right. This is a divided Congress, and a divided nation politically. But there is one issue where the American people are not divided. Whether you’re Democrat, Republican, independent, conservative, progressive, you know that the pharmaceutical industry is ripping us off.
Do you think that the Biden Administration is doing enough in terms of lowering drug prices?
Well, let me just say this: they’re doing more than any other administration in history. What we have seen now is for the first time, Medicare is beginning to negotiate prescription drug prices. Is it happening as fast or as extensively as I would like? No, but it is a significant, significant start.
Number two, working with President Biden, we are now moving towards making sure that no senior citizen in Medicare will pay more than $35 a month for insulin. That’s a big deal. And within a couple of years, there will be a cap on what seniors can pay for out of pocket costs. So I answer your question in two ways. One, is that the Biden Administration has done more than any other administration in taking on the pharmaceutical industry. That’s the good news. The bad news is I think they should be doing a lot more than that.
How much credit should President Biden get for the reductions that we’ve seen in insulin prices?
A couple of years ago, when I was running for President, I took some folks from the Midwest to purchase insulin. We left from Detroit and went to Ottawa. And we purchased insulin in Ontario, Canada for 1/10th of the price that they were paying here in the United States.
So I think it’s a combination of factors. I’m proud of what the HELP committee has done on this, proud of what the Biden Administration has done, and I’m proud of what the grassroots organizations have done.
Do you think that’s going to resonate with voters in November?
I hope it does.
Is there anything you think that Americans are misunderstanding when it comes to how their drugs are priced and how that process happens?
I think most people don’t know that we are paying literally for the same exact bottle of prescription drugs, sometimes 10 times more than other people around the world. Number two, they may not know that the pharmaceutical industry is enormously profitable. They may not know that these companies pay their CEOs exorbitant compensation packages of $20, $30, $50 million a year. And they may not know that one out of four people walk into a drugstore to fill the prescription that their doctor prescribed cannot afford to do that. So you have a major, major healthcare problem in terms of the high cost of prescription drugs.