House lawmakers lashed out at two pharmaceutical companies for using profits from high drug prices to lead extravagant lifestyles, with one company throwing a lavish yacht party.
“Your extravagance is something that we all have to pay for,” Rep. Jason Chaffetz, R-Utah, chairman of the House Oversight Committee, said to a top executive from Turing Pharmaceuticals, which raised the price of a decades-old drug called Daraprim from $13.50 a pill to $750.
The committee held a hearing Thursday featuring drug companies and a top official with the Food and Drug Administration.
“The people in my district are making $30,000 a year, probably the money that you spend in a day or a week, and yet they have to get drugs to stay alive,” added Rep. Elijah Cummings of Maryland, the top Democrat on the panel, to the executives from Turing and Valeant Pharmaceuticals.
The hearing focused mainly on the antics of Turing and Valeant, which bought older generic drugs that faced no competition and then raised the prices. Among the criticisms was that high prices are busting hospital budgets and raising insurance premiums.
The companies could get away with the price hike because the old drugs didn’t have any generic competition.
Martin Shkreli, the former leader of Turing, attended the hearing but declined to answer questions because of a federal indictment on unrelated securities fraud charges. He later tweeted that the committee members were “imbeciles.”
Turing Chief Financial Officer Nancy Retzlaff said that the company was losing money.
“Don’t tell me that you are losing money. Don’t try to pretend that you are justified,” Chaffetz said.
He pointed to an array of expenditures, most notably a $23,000 yacht party that included $800 for a cigar roller.
He also blasted the company for several raises, including one employee who received a 54 percent raise from $275,000 to $600,000.
“You don’t go out and rent yachts and fireworks and all that kind of stuff unless you can jack up the price,” Chaffetz said.
Retzlaff continually said that patients hardly pay any of the $750 and that Daraprim serves only a small portion of the patient population.
The company hasn’t reduced the price of the drug, which Shkreli promised to do last year, but Retzlaff did say that the company offers a 50 percent discount to hospitals, which primarily dole out the drug.
“I don’t believe my company has done anything wrong,” she said later in the hearing. “Darapim was priced far below market value compared to other drug treatments for rare and serious diseases.”
But Chaffetz highlighted that the cost is borne by insurers, which then pass that cost on to patients.
Valeant Pharmaceuticals also got heat from lawmakers for raising the price of two heart drugs primarily used by hospitals: Isopurel by 525 percent and Nitropress by 212 percent.
The high prices were denting hospital budgets, with some hospitals reporting losses.
Valeant’s interim CEO, Howard Schiller, was contrite at the hearing, but said the company gave a 30 percent discount on the new prices.
“We acknowledge that it was too aggressive,” Schiller said, referring to the price increases.
But that wasn’t enough for Cummings.
“A 30 percent discount on a 500 percent increase hardly makes a dent,” he said. “Does that sound like a good deal to you?”
“We tried to address the issue from a portfolio point of view,” Schiller responded, noting that the company reduced prices 10 percent across the board and that it has frozen all price increases except for some gastrointestinal drugs.
Cummings wasn’t mollified, asking how long that freeze will last. Schiller responded he couldn’t say.
Schiller added that Valeant was not going to go after “opportunities such as isopurel and nitropress.”
The people who regulate the pharmacy industry didn’t escape scrutiny, either.
Several Republicans on the panel drew their ire on the Food and Drug Administration, saying the agency needs to approve generic drugs much faster.
“The amount of time that it takes I think is criminal,” said Rep. Blake Farenthold, R-Texas, referring to a 15-month review time for a new generic drug.
The agency hopes to reduce that period to 10 months starting in October, said Janet Woodcock, the director of the FDA’s Center for Drug Evaluation and Research.
Woodcock said many more factors go into the higher drug prices for generic drugs.
“There are reasons for a very small segment of generic drugs that there is no generic competition,” she said.
