WASHINGTON – In a Senate Health, Education, Labor, and Pension (HELP) Committee hearing today, U.S. Senator Tommy Tuberville (R-AL) questioned Chief Executive Officers (CEO) Joaquin Duato of Johnson & Johnson, Robert Davis of Merck, and Chris Boerner of Bristol Myers Squibb. Senator Tuberville questioned the three CEOs on the impact of federal regulations on cancer treatments as well as about the Biden administration’s vaccine mandate on our troops.
Senator Tuberville’s speech can be found below, and his remarks viewed here.
SEN. TUBERVILLE: “Thank you, Mr. Chairman. Thanks for being here today. It’s pretty well known where our Chairman stands on this. His worldwide view is pretty clear that he believes you guys are setting drug prices. And it’s all about corporate greed.
I’m a true believer of capitalism. And I believe that we have the best health care system in the world. The problem is we’ve gotten federal government involved in it, and it’s not implemented the way it probably should be. That being said, I’ve just got a few questions here on a couple of things. Mr. Davis, can you explain me something?
The Biden administration has two huge priorities: dictate prices of prescription drugs, specifically small molecule drugs, and cure cancer. Can you walk me through how those priorities might be in direct contradiction of each other?”
DAVIS: “Well, Senator, I think what you’re referring to is what is called the pill penalty underneath the IRA. And what that does is, effectively, say that at nine years post your first approval, your price or your drug will be negotiated and it’s 13 if it’s a large. The issue that that raises is that it disfavors small molecule development. And the reality of it is, if you look across the majority of cancer treatments, they are still small molecules.
And as Chris pointed out, earlier, the development of cancer drugs usually starts in the phase starting at the sickest patient, the last stage of disease. And then you work forward into earlier stages of disease where in fact you can start to maybe talk about a cure. To do those studies in early stage disease often called adjuvant or new adjuvant care, and we have nine approvals in that space. Those studies can take seven to nine years to do. So obviously, if at nine years, I have to significantly reduce the price of that drug to a point that it is potentially at basically no profit, my incentive to do those follow on studies is not there.
And that is our worry that, if you look at cancer care, you’re going to see patients suffer because we can’t get to really talking about cure, which is in an earlier stage of disease. I’d also point out you didn’t ask about Alzheimer’s and neuroscience diseases, but most CNS diseases also require small molecules because large molecules, biologics, can’t penetrate the blood brain barrier. So we are disincentivizing some of the largest areas of sickness and chronic need in our society through that pill penalty you referred to.”
SEN. TUBERVILLE: “Thank you, Mr. Boener. We hear a lot about how healthcare costs are ridiculously high. I think all of us would agree to that some degree. I want to peel back the onion here a little bit today we’re being led to believe that these costs are due to corporate greed. I want to know if we’re going to talk about some additional drivers of health care costs.
When the federal government dumped trillions into various industries during COVID, we upended our markets and drove prices through the roof. You know, when I talk to healthcare folks back in Alabama, labor cost is one huge problem. But their other costs include supplies and raw materials. What impact are these having on the drug development and high drug cost?”
BOENER: “Certainly, Senator, when we look at the cost basis for us doing what we do as a company, which is to bring forward new medicines for patients, we have to factor in all of those costs. I’ll give you an example: in cellular therapy, which is really transforming very late line hematologic diseases—these are very complex medicines; you’re taking patient cells, manufacturing them and reengineering them to really target and hone in on cancer cells and then you re-inject them in the patients. This is really a first-generation technology.
Unfortunately, it has very high labor cost because this is one that’s very manual. It’s a multi-step process to manufacture these products. Their transportation costs, their raw material costs—all of those factors go into a cost of these first-generation medicines. Now we’re very focused on trying to innovate to get to a second and third generation quickly so we can bring those costs down, not only because it’s important for us to be able to funnel additional research into development, but also so that we can bring ultimately the cost down to patients, so they are absolutely a factor, Senator.”
SEN. TUBERVILLE: “Thank you. Mr. Duato, I’m going to ask you this. With your accent and mine, we’ll probably have a tough time. But I know you’re probably aware that in 2021—you weren’t CEO, I don’t think, at that time—but the Biden administration announced a mandate that U.S. troops and personnel must take the COVID vaccine in order to serve in the military. Are you familiar with that?”
DUATO: “I’m familiar, sir. Thank you.”
SEN. TUBERVILLE: “Are you aware that more than 8,400 troops were kicked out of the military for declining to take the code vaccine? These were mostly young, healthy Americans for whom COVID risk was low? Are you aware of that?”
DUATO: “No, I was not aware of that, sir.”
SEN. TUBERVILLE: “Thank you. Did you or did anyone at Johnson & Johnson encourage the Biden administration to mandate this COVID vaccine to the military? Are you familiar with that?”
DUATO: “We did not, sir.”
SEN. TUBERVILLE: “Okay. How much did Johnson & Johnson benefit financially from the administration’s military COVID vaccine mandate? Could you have any kind of guess to that?”
DUATO: “Our effort in the COVID vaccine that we collaborated with the government; it was a time of global emergency. So we thought that as healthcare company that cares for patients who needed to collaborate with the your government that was entirely not for profit.”
SEN. TUBERVILLE: “Do you think the soldiers who were expelled from the military was the right thing to do and should they be reinstated?”
DUATO: “I was not aware of this situation, sir. I am not aware of these circumstances, so I cannot comment on that.”
SEN. TUBERVILLE: “Thank you. Thank you, Mr. Chairman.”
Senator Tommy Tuberville represents Alabama in the United States Senate and is a member of the Senate Armed Services, Agriculture, Veterans’ Affairs, and HELP Committees.