On February 8, 2024, the Senate Committee on Health, Education, Labor & Pensions (HELP Committee) will hold a hearing titled, “Why Does the United States Pay, by Far, the Highest Prices in the World for Prescription Drugs?” CEOs from Johnson & Johnson, Merck and Bristol Myers Squibb will testify before the committee. In January 2024, committee chairman Bernie Sanders (I-VT) threatened to subpoena CEOs Joaquin Duato and Robert Davis after the two initially refused to appear before the committee. Sen. Sanders said that the two CEOs, representing two of the largest pharmaceutical companies in the world, claimed they lacked the expertise to testify, requesting other executives appear. 

Meanwhile, the three companies have hiked prices on many of their life-saving drugs, with patents set to expire on at least four drugs manufactured by Johnson & Johnson, Merck, and Bristol Myers. The expiration of these patents could lead to an increase of generics entering the marketplace, lowering costs for consumers.

Data released by the Kaiser Family Foundation (KFF) in February 2024 shows one in four Medicare beneficiaries live on incomes below $21,000 per person, with half living on incomes below $36,000. KFF notes median income declines with age among older adults, women and black and brown beneficiaries. This is also the case for savings, with one in four beneficiaries holding savings below $16,950 and half having savings under $103,800, with lower savings for women, black and Hispanic beneficiaries. 

 

An Accountable.US review of Johnson & Johnson, Merck and Bristol Myers Squibb shows these companies have profited and handsomely rewarded their CEOs. Meanwhile all three have sued the Biden administration over its efforts to lower the price of prescription drugs while spending $25.7 million lobbying against these efforts in 2023. These companies have also spent approximately  $38.3 billion on acquisitions since 2023, with executives bragging these purchases will lead to even more growth and revenue. 

 

Johnson & Johnson (J&J)

In July 2023, Johnson & Johnson (J&J) sued the Biden administration over its Medicare drug price negotiation. J&J is also a board member of the Pharmaceutical Research and Manufacturers of America (PhRMA), which filed a June 2023 suit challenging President Biden’s initiative to lower the prices of prescription drugs through the Inflation Reduction Act. 

A review of J&J’s 2022 proxy statement shows the company handsomely rewarded its CEO, Joaquin Duato with $13.1 million in total compensation in 2022, including $201,894 for Duato’s use of corporate aircrafts, company cars, and a driver. 

In Q4 2023, J&J reported quarterly net earnings from “continued operations” increasing 28%, with FY 2023 earnings nearly doubling to over $35.1 billion when including discontinued operations such as its consumer brand segment which recently spun off into the independent company, Kenvue. Ultimately, J&J rewarded shareholders with $14 billion through a combination of stock repurchase and dividends. 

After J&J acquired heart pump maker Abiomed for a staggering $16.6 billion in December 2022, Duato hinted the company would continue acquisitions to further expand its eye care, orthopedics and robotics portfolios. Since then, the company has acquired: 

  • In November 2023, Johnson & Johnson acquired Laminar, a company looking to eliminate left atrial appendage (LAA) closure surgery, for $400 million. The move came the very week its competitor Medtronic announced it acquired an “LAA exclusion system in August from Miami-based medical device incubator Syntheon.” 
  • In January 2024, J&J acquired Ambrx Biopharma for $2 billion. The move served as J&J’s entry into antibody-drug conjugates treatment, following competitors AbbVie, Pfizer and Merck entrance into the space over the past year. The move also came as J&J “scrambles to fill a revenue hole” for when its drug Stelara is expected to face competition from generics entering the marketplace in 2025.

In August 2022, Duato made public comments denouncing President Biden’s Medicare drug price negotiation provision. Duato claimed the legislation would have “a chilling” and “detrimental effect” for pharmaceutical companies’ ability to “invest in R&D and to develop new medicines.” A review of its 2023 lobbying shows the company has spent $6.8 million while lobbying against the Inflation Reduction Act and S. 150, the “Affordable Prescriptions for Patients Act of 2023,” bipartisan legislation aimed at ending “product hopping,” the practice of when a “brand-name pharmaceutical company switches from one version of a drug to another” in order to decrease market competition. 

Finally, J&J has faced numerous lawsuits and faced judgements over anticompetitive conduct, among these are:

  • In July 2021, J&J agreed to settle a lawsuit brought by competitor Pfizer in 2017 that found it had engaged in “price manipulation” after J&J threatened to withhold rebates from insurers that had determined Inflectra was an acceptable medical alternative to Remicade, causing some insurers to “reverse course.”  
  • In March 2023, the Biden administration announced the first pharmaceutical makers to face penalties for raising Medicare drug prices faster than the inflation rate. The penalties result from the Inflation Reduction Act and require companies to repay Medicare for price hikes through rebates, with J&J’s lung cancer drug Reybrevant making the list of violators. In March 2023, J&J was also ordered to pay $40 million in damages resulting from an antitrust lawsuit accusing the company of preventing health care providers from buying competing drugs at lower prices through its “Biosimilar Readiness Plan.” 

 

Merck 

In June 2023, Merck sued the Biden administration, arguing the IRA’s Medicare drug price negotiation provision violated the Fifth Amendment and would lead to the government “tak[ing] Merck’s patented innovations.” Merck President and CEO Robert M. Davis also sits on the board of PhRMA, which sued the Biden administration in June 2023. On a Q3 2023 earnings call, Davis claimed the IRA would “damag[e]” the pharmaceutical industry, calling it “price setting” and “misguided.” 

A review of Merck’s 2022 proxy statement shows Davis earned $18.6 million in total compensation in 2022. Davis’ compensation also included $10,000 for tax preparation services, $191,073 for his use of corporate aircraft, $8,113 for the use of a company car and driver, and $6,689 for home security. 

Since April 2023, Merck has spent at least $12 billion on acquisitions, including:

  • In January 2024, Merck announced plans to acquire Harpoon Therapeutics for approximately $680 million, receiving unanimous support from Harpoon’s board of directors. 
  • In November 2023, Merck acquired Caraway Therapeutics for up to $610 million, including “contingent milestone payments.” 

In 2008, Merck agreed to pay a massive $650 million settlement with the Department of Justice over its anti-competitive practices for “failing to pay proper rebates to Medicaid” and “offer[ing] deep discounts” for hospital systems that used its products over competitors. Merck even rewarded physicians with illegal kickback payments that were disguised as training or consultation fees.

Finally, a review of Merck’s 2023 lobbying shows the company spent nearly $10 million while lobbying against the Inflation Reduction Act’s Medicare drug price negotiation mandate and S. 150, the “Affordable Prescriptions for Patients Act of 2023.”

 

Bristol Myers Squibb

In June 2023, Bristol Myers Squibb filed its own lawsuit alleging the Biden administration violated the First and Fifth Amendments and is represented on the PhRMA board, which filed a June 2023 lawsuit challenging the IRA’s Medicare drug negotiation provision. 

A review of Bristol Myers’ 2022 proxy statement shows it paid its previous CEO Giovanni Caforio over $20 million and paid then-chief commercialization officer Chris Boerner $6.8 million, including $4.2 million in stock awards. In November 2023, Boerner succeeded Caforio as CEO and joined the company’s board of directors. Before stepping down as CEO, Caforio penned an opinion piece in The Wall Street Journal claiming the IRA’s Medicare drug price negotiation provision would lead to the development of fewer drugs.

In February 2024, Bristol Myers reported better than expected sales, with sales of new drugs, such as Reblozyl and Opdualag, increasing 66% year-over-year. This led the company to say it was “tak[ing] a strategic approach” to “returning capital to shareholders,” including a $3 billion increase to its stock buyback program in December 2023. 

Meanwhile, Bristol Myers has spent a staggering $23.9 billion on acquisitions since October 2023 including:

  • In December 2023, Bristol Myers acquired RayzeBio for $4.1 billion. CEO Boerner said the acquisition of RayzeBio, a radiopharmaceutical therapeutics company, would “enhanc[e]” Bristol Myers’ “increasingly diversified oncology portfolio” and would lead to growth in the “back half of the decade and beyond.”
  • Bristol Myers also acquired Karuna Therapeutics for $14 billion in December 2023. CEO Boerner boasted the acquisition would “enhance [its] growth through the late 2020s and into the next decade” during an interview on CNBC.
  • In November 2023, Bristol Myers spent $180 million to acquire Orum Therapeutics’ blood cancer drug, which was recently approved by the FDA for an early-stage study.
  • In October 2023, Bristol Myers acquired Mirati Therapeutics for up to $5.8 billion. The company announced part of the deal would pay Mirati shareholders $1 billion if the FDA approved a drug manufactured to treat lung cancer.

Bristol Myers and its subsidiary Celgene have repeatedly landed in hot water for anti-competitive practices, including:

  • In August 2021, Bristol Myers agreed to pay $75 million to settle allegations brought by the California attorney general’s office that it overcharged insurance and healthcare providers by falsifying rebate amounts.  
  • In September 2023, Bristol Myers’ subsidiary Celgene faced a lawsuit filed by Blue Cross and Blue Shield of Louisiana alleging the company engaged in an “illegal scheme” to charge insurers “hundreds of millions” of dollars more and “sought fraudulent patents” for its myeloma drug Pomalyst.
  • In October 2023, the Mayo Clinic and LifePoint Health filed a lawsuit against Bristol Myers alleging the company coerced competitors to delay the development of a generic version of its drug Revlimid. The suit alleged Celgene and Bristol Myers successfully coerced competitors to delay generic alternatives until 2026.

Finally, a review of lobbying disclosures shows Bristol Myers Squibb spent $8.8 million in 2023 while lobbying against the Inflation Reduction Act and the implementation of its Medicare drug price negotiation provision.

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