Pharma CEOs may be subpoenaed as IRA dispute rumbles on

Pharma CEOs may be subpoenaed as IRA dispute rumbles on

US Senator Bernie Sanders has said he plans to hold a vote on 31st January to subpoena the chief executives of Johnson & Johnson and Merck & Co for a hearing on drug pricing in front of the Health, Education Labor & Pensions (HELP) committee.

The independent Vermont lawmaker is calling on J&J’s Joaquin Duato and Merck’s Robert Davis to explain personally why their medicines generally cost much more in the US. The two CEOs refused to testify in front of the HELP committee last year.

“It is absolutely unacceptable that the CEOs of Johnson & Johnson and Merck have refused an invitation by a majority of members on the HELP Committee to appear before Congress about the outrageously high price of prescription drugs,” said Sanders.

“These CEOs may make tens of millions of dollars in compensation. The pharmaceutical companies they run may make billions in profits,” he added. “It is time to hold these pharmaceutical companies accountable for charging the American people the highest prices in the world for the medicine they need.”

Duato and Davis declined to appear in front of the panel last year and, in a letter sent to Sanders, J&J general counsel Brian Smith said that another “appropriate” senior pharma executive would be made available to provide testimony for the company on drug pricing issues. Merck/MSD made a similar commitment.

If the CEOs are forced to attend, it will represent a vanishingly rare course of action by the HELP committee, which has only gone down the subpoena route once in its history, back in the early 1980s.

There have been allegations that the subpoenas are a form of retaliation over litigation filed by J&J and Merck (known as MSD outside North America) – as well as other pharma companies and trade organisations – challenging the Biden administration’s Inflation Reduction Act (IRA). The drugmakers have pointed out that the pharma companies called to testify are the only US-based companies with IRA litigation ongoing.

The IRA has introduced a series of measures that aim to reduce medicine prices, including allowing Medicare to negotiate prices for some of the most expensive drugs and imposing mandatory rebates on drugs whose prices increase faster than the rate of inflation.

The negotiation is the target of the pharma industry’s legal challenges, which claim that the initiative amounts to mandatory price-setting by government and will cripple companies’ ability to recoup investment on R&D into new medicines. At the heart of the litigation is the claim that the IRA violates the Fifth Amendment, which includes provisions that require the federal government to pay fairly for a private asset acquired for public use.

“The hearing and invitation to testify appear intended to single out and punish the companies for their decision to challenge the ‘Drug Price Negotiation Programme’ in court,” said Merck/MSD general counsel Jennifer Zachary in a letter to the committee.