Pharmaceutical giant AbbVie inflated prices for widely-used drugs while its executives pocketed growing bonuses, according to a new report from the House Oversight and Reform Committee. Now it’s helping fund ads attacking legislation that would lower prescription drug costs.
The committee’s two-year investigation found that AbbVie “pursued a variety of tactics to increase drug sales while raising prices for Americans, including exploiting the patent system to extend its market monopoly, abusing orphan drug protections to further block competition, and engaging in anticompetitive pricing practices.”
The company raised the cost of the popular drug Humira, which is used to treat rheumatoid arthritis and other ailments, 27 times and by a total of more than 470%, according to the report. An annual supply of the drug now costs $77,000. AbbVie, along with Jannsen Biotech, also hiked the price of Imburvica, a drug used to treat certain cancers, by 82%, raising the cost of an annual supply to between $181,529 to $242,039, according to the committee.
The company also invested in hundreds of patents for Humira and cut deals with competitors to prevent them from being sold for less in the U.S., even though the FDA has approved six similar drugs, according to the report.
The company has raked in more than $100 billion in net revenue from those two drugs since 2013, which the committee said was “driven in large part by AbbVie executives’ decision to repeatedly raise the prices of Humira and Imbruvica.” The company’s top executives pocketed $480 million in compensation during that span, “much of which was directly linked to revenue increases,” the report said.
“The findings show how AbbVie repeatedly raised the price of life-saving drugs to satisfy corporate greed,” Rep. Carolyn Maloney, D-N.Y., the chairwoman of the committee, said in a statement. “These price hikes led to billions of dollars in corporate profits and enriched company executives while harming American patients and taxpayers.”
Maloney, along with Judiciary Committee Chairman Jerry Nadler, D-N.Y., and Judiciary Subcommittee on Antitrust, Commercial and Administrative Law Chairman David Cicilline, D-R.I., called on the Federal Trade Commission to investigate whether the company’s “anticompetitive conduct is in violation of U.S. law.”
AbbVie is one of 33 member companies of the industry’s top lobbying group, PhRMA, which raised nearly $450 million from membership dues in 2018, the most recent year for which data is available. But AbbVie’s political action committee is one of just two pharmaceutical company PACs to donate the maximum $40,000 to PhRMA’s federal PAC since 2013, a potential indicator that AbbVie was highly motivated to influence legislation.
PhRMA, in turn, spreads that money around to political campaigns across the country as well as other trade groups like the American Action Network (AAN), a conservative dark money group that launched a $4 million ad campaign to defeat the Democrats’ H.R. 3 proposal, which would allow Medicare to negotiate lower prices for prescription drugs and cap out-of-pocket drug costs at $2,000. PhRMA has donated more than $20 million to AAN since 2010, making it by far AAN’s largest donor, including $4.5 million in 2019 — the biggest donation PhRMA gave to any group that year.
“This ad blitz may as well come from Big Pharma itself,” Peter Maybarduk, director of the Access to Medicines program at the watchdog group Public Citizen, said in a statement.
The ad campaign targets 43 competitive House districts, according to AAN, arguing that H.R. 3 would hamper companies’ abilities to develop new treatments and limit access to the coronavirus vaccine. Dan Conston, the president of AAN, accused House Speaker Nancy Pelosi, D-Calif., of “pushing a socialist takeover of the prescription drug industry.”
AAN, one of the 10 highest-spending dark money groups last year, has also spent $9 million on ads boosting Republican congressional candidates and donated more than $26 million to the Congressional Leadership Fund, a super PAC backing House Republicans, according to the Center for Responsive Politics (CRP). Along with its ads targeting H.R. 3, AAN has also launched an ad campaign “boosting vulnerable Republicans who supported an alternative bill considered much friendlier to drugmakers,” according to the watchdog group.
The pharmaceutical industry has already shattered records this year, spending an unprecedented $92 million to lobby the federal government in the first three months of this year, according to the CRP, including $8.7 million from PhRMA. Stephen Ubl, the CEO of PhRMA, criticized H.R. 3 last month, claiming it would “destroy an estimated one million American jobs.” The U.S. Chamber of Commerce, the biggest lobbying spender this year, has also come out against the bill, comparing it to “government price controls” and claiming it would cost hundreds of thousands of jobs.
The Congressional Budget Office said in 2019 that the bill would likely hamper some pharmaceutical development due to lower “potential global revenues” but predicted that “the effects of the new drug introductions from increased federal spending under the bill on biomedical research would be modest and would almost all occur more than 20 years in the future.” On the other hand, it estimated that the bill would save more than $450 billion in drug spending over the next decade.
PolitiFact rated PhRMA’s claims about the impact of H.R. 3 “mostly false.” Stacie Dusetzina, an associate professor of health policy at Vanderbilt University, told PolitiFact that “there is a good reason to believe that the drugs you would lose are those that have the smallest benefit and highest price tag.”
Dr. Peter Bach, who heads the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center, predicted in a Bloomberg op-ed that the reduced spending under H.R. 3 “would barely slow new drug discovery at all.”
PhRMA has also donated nearly $1.6 million to Center Forward, a dark money group backing moderate “blue dog” Democrats, according to CSP. Center Forward flew House staffers to meet with pharmaceutical executives in 2019. Earlier this month, a group of 10 centrist House Democrats, led by Reps. Scott Peters, D-Calif., and Jake Auchincloss, D-Mass., echoed the pharmaceutical industry’s claims in a letter to Pelosi calling instead for a “bipartisan” bill to rein in drug prices.
That letter raises questions about whether Democrats have enough votes to advance H.R. 3 out of the House, but in any case it’s highly unlikely that the bill could get the 60 votes necessary to defeat a filibuster in the Senate.
A group of 17 senators led by Sens. Bernie Sanders, I-Vt., and Debbie Stabenow, D-Mich., called on President Joe Biden last month to include the prescription drug legislation, as well as other measures to expand Medicare, in his American Family Plan, which Democrats could likely pass with a simple majority using the budget reconciliation process if they so choose.
“We believe Medicare and the federal government should do what every major country on earth does: negotiate with pharmaceutical companies to lower the high price of prescription drugs,” the senators wrote, adding that the “savings that are achieved through price negotiation should be used to expand and improve Medicare.”