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- A House Oversight panel released the results of investigations concluding that Teva and Celgene hiked prices for best-selling drugs in order to boost profits.
- Celgene, now part of Bristol Myers Squibb, raised the price of its blood cancer treatment from $215 to $719 per pill.
- “I have to consider every legitimate opportunity available to us to improve our Q1 performance,” former Celgene CEO Mark Alles wrote in an email in 2014.
- The documents also showed how the companies targeted the US for drug hikes rather than other countries, given that the government isn’t allowed to regulate drug prices.
- Democrats want to use the reports to blast President Donald Trump and Republicans ahead of the election for refusing to support their drug pricing bill.
- Visit Business Insider’s homepage for more stories.
House Democrats have released details of an 18-month investigation into pharmaceutical companies aimed at boosting voter support for the federal government to regulate drug prices.
Two reports released Wednesday from the House Committee on Oversight and Reform show that drug companies Celgene Corporation and Teva Pharmaceuticals raised the prices of top-selling drugs in order to meet their revenue targets. The documents also shed light into how the two companies targeted the US for price hikes on these drugs given that the American government doesn’t regulate medical prices.
The documents are the first of several batches to come from the Democrat-led House panel and “provide significant new insights into how and why drug companies keep increasing their prices so dramatically,” the panel’s chairwoman, Rep. Carolyn Maloney of New York, wrote in a letter accompanying the reports.
Democratic lawmakers are expected to blast drug company CEOs over the reports’ findings during a hearing Wednesday. Their aim is also to pressure Republican lawmakers to support a drug pricing bill that has already passed in the House twice — first in December and again in June — that would let the US government regulate prices for dozens of drugs and penalize companies that don’t comply.
Democrats also hope their investigation can serve as a political attack against President Donald Trump in the final weeks leading up to the 2020 election. Drug pricing is a major healthcare concern for voters, and Trump vowed during his 2016 campaign to let the government regulate drug prices if elected but then didn’t support the Democrats’ drug pricing bill.
Business financial make money capital trading Drug companies raised prices dozens of times
The reports compiled by the Democrat-led committee looked at pricing trends for some of the most profitable drugs in the US. They reveal frequent drug price increases, as well as email exchanges between company executives showing they were done to boost profits.
While drug price hikes receive frequent news coverage, the reports expose the decision making behind the increases. They directly push back against arguments from drug company executives who say they need to set high prices to account for the cost of research and development, as well as charges by middlemen.
From 2005 to 2019, for example, Celgene raised the price of the blood cancer treatment Revlimid 22 times, sometimes as much as three times in a single year. The price went from $215 to $719 per pill.
In 2019, when Bristol Myers Squibb acquired Celgene, it raised the price of Revlimid again — to $763 a pill. As a result, a monthly course of the drug carried a list price of $16,023.
An email obtained by the committee found that former Celgene CEO Mark Alles issued an emergency price increase on Revlimid in 2014 so the company could meet its revenue targets.
“I have to consider every legitimate opportunity available to us to improve our Q1 performance,” wrote Alles, who left the company last year but is testifying before the committee Wednesday.
Another 2017 document suggested raising prices to meet revenue goals. The company did end up increasing the list price of Revlimid by 30% between January 2017 and January 2019, according to the report.
Business financial make money capital trading Executives brought in millions as drug prices soared
The report from the Oversight Committee argues that price increases had a direct effect on executive compensation. Between 2006 and 2017, Celgene paid its top executives more than $400 million.
A second report from the committee dives into the practices of drug company Teva Pharmaceuticals, which raised the price of Copaxone, its injectable multiple sclerosis drug, 27 times.
From 1997 to 2020, the price of the drug rose from less than $10,000 to $70,000 a year.
People who need the drug take it regularly for years, and a Kaiser Family Foundation study found that patients on Medicare could face an average of $6,672 a year in out-of-pocket costs in 2019. One company email released as part of the report acknowledged that the costs patients pay could be at least partially attributed to price increases.
As a result of the price increases, Teva’s net revenue for Copaxone rose from $411 million in 2002 to more than $3.3 billion by 2016. Top Teva executives received $190 million from 2012 to 2017.
The committee wrote in its report that documents it obtained from Teva show “that employees at all levels of the company were incentivized to exceed financial targets.” It cites a 2016 presentation as an example, which recommended Teva build “more attractive career paths for pricers, train them and reward them based on profit.”
Business financial make money capital trading Targeting the US over other countries for price increases
Another finding from the reports shows how Celgene and Teva targeted the US for its inability to regulate drug prices.
Celgene circulated documents noting that the US is blocked by law from letting Medicare regulate drug prices. The government can’t set drug prices but private health insurers who run the drug plans on behalf of Medicare negotiate costs.
Celgene described the US as a “highly favorable environment with free-market pricing” but noted in a second slide that scrutiny around prices was growing. In a third slide the company concluded that Celgene could continue to “win” by protecting the current drug-pricing system.
Raising prices had an effect on patient costs. In 2019, patients faced an average of $2,923 in out-of-pocket costs for Revlimid, according to a study from the Kaiser Family Foundation.
Teva similarly increased the price of Copaxone in the US while keeping or even lowering prices in other countries, the report found. It specifically lobbied against ideas to let the government set prices, including through meetings with White House officials.
In a 2016 presentation, Teva said of its key strengths was its ability to “increase prices successfully,” particularly in the US.
Read the full investigations below to see other strategies the report says Celgene and Teva used in a bid to limit competition and maximize profits.
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