Will AbbVie, maker of the world’s best-selling drug, finally face the music over its price hikes?
If you’re looking for a story which encapsulates the duality of the pharmaceutical industry, you don’t have to search much further than AbbVie. That tale may finally be reaching a turning point, if bipartisan grilling of the company’s CEO Richard Gonzalez by Congressional leaders on Tuesday are any indication.
The creator of the world’s best-selling drug, Humira, has never been subtle about its strategy for success. Create (or, rather, acquire) a promising pharmaceutical and truly beneficial product. Test it out in dozens of different diseases to see if you can expand its market reach. Put up TV ads at every possible chance so people know, subconsciously or otherwise, the names “AbbVie” and “Humira.” And then erect a patent thicket so dense that your spotlight product can still be your cash cow 20 years after its first FDA approval without much fear of competition.
That latter point was the subject of a lot of Congressional derision on Tuesday from both sides of the aisle during a committee hearing which also pointed to a pattern of AbbVie cutting drug prices in other nations where they face more rivals and making up for the shortfall by hiking prices in the U.S.
“Drug companies are actively targeting the U.S. for price increases, while cutting prices in the rest of the world,” said Rep. Carolyn Maloney, chair of the House Oversight Committee, during the hearing.
It’s difficult to parse the intricacies of drug pricing in America given the assorted middlemen between the pharmaceutical industry and the patient: The list price may not be what you ultimately pay depending on your personal circumstance or insurance status. But for Humira, the data have been clear for quite some time.
For instance, AbbVie promptly announced a list price increase of 7.4% for Humira at the beginning of 2021. A drug initially approved in 2002 continues to be a best-seller without any changes to is underlying ingredients. And, according to the House committee report, AbbVie used the relatively lenient American patent structure for biotech to increase the price of Humira to $77,000 for a year’s supply. The cost of Humira without insurance can easily exceed $6,000 if you’re paying out of pocket.
CEO Gonzalez swung back hard against the allegations, as he has in the past, defending AbbVie’s patent strategy as entirely in accordance with the law and a product of evolving understanding of just what Humira might be able to do.
Republican Rep. Clay Higgins didn’t buy that argument. “They’re frivolous,” he said, referring to AbbVie’s hundreds of patents on various tiny steps of Humira’s manufacturing process. “You have a right to make an honest profit but it’s a question of whether or not it’s an honest profit.”
Representative James Comer, the top Republican on the committee, also took aim at AbbVie’s patent practices.
“While seeking hundreds of patents on a medication or vaccine is not illegal under our existing system, it can be anti-competitive and result in higher costs,” he said.
All of this is ensconced around an ongoing debate about biotech intellectual property. The Biden administration’s decision to waive IP rights for COVID vaccines raised plenty of debate in the biotech community about balancing profit incentives with social responsibility. Investors and analysts are a bit more sharp with their assessment of AbbVie’s tactics.
Where this political road ends is an open question. Drug pricing has long been a flashpoint in American politics with little to show for it. Will the behavior of companies like AbbVie influence more politicians to support direct government price negotiations for pharmaceuticals, as is common in many other nations? That would certainly be an uphill political climb.
But through its tactics, AbbVie has clearly given the political crowd an easy talking point and big pharma villain to challenge.
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