WASHINGTON — Martin Shkreli, the colorful former pharmaceutical executive who helped spark a national furor over drug prices and who more recently has feuded with rappers, comes to Capitol Hill for a public flogging Thursday.
Shkreli is traveling here for a congressional hearing on prescription drug prices, and he’s likely to be treated as the star witness — even though his lawyer says he plans to invoke the Fifth Amendment.
Nonetheless, the hearing will likely focus on far more than Shkreli and the decision of his former firm to dramatically increase the price of a decades-old drug. There are plenty of other price hikes to discuss. And the hearing is designed to look at other topics, such as what the Food and Drug Administration is doing to approve more generic drugs, which could give patients less-expensive treatment options.
Here are the main issues to watch at Thursday’s hearing:
Will Shkreli actually be able to keep his mouth shut?
The official plan is, no matter what questions the House Oversight and Government Reform Committee members ask him, Shkreli will just invoke the Fifth Amendment and stay quiet.
“Will say nothing. Take the 5th,” Shkreli’s new lawyer, New York defense attorney Benjamin Brafman, told STAT in an email.
For Shkreli to pull that off means he will have to show more self-discipline than he has at any time since he gained national attention for hiking the price of Daraprim, a drug manufactured by Turing Pharmaceuticals and used to treat people with AIDS, by more than 5,000 percent.
The livestream-loving ex-pharma executive would have to sit there at the witness table, biting his tongue, as Republicans and Democrats scold him for the price hike — and, most likely, for the comments he made in emails obtained by the committee, in which he celebrated the Daraprim deal with statements like, “$1bn here we come.”
In an interview Wednesday with the Breakfast Club, a New York radio show, Shkreli declared that “this is one of the smallest drugs around … a few thousand people take this medicine,” adding that “there’s drugs three times this price, 10 times this price. This is not like an insane price.”
And he has admitted he could throw a few nasty words back at Congress, saying in a Fox Business Network interview Tuesday that he wishes he could “berate” and “insult” lawmakers.
Will any of the other drug execs share the heat?
The other Turing witness will be Nancy Retzlaff, the company’s chief commercial officer. She has insisted that “no patient needing Daraprim will ever be denied access,” but she has also defended the company’s decision to rely on discounts rather than just lowering the drug’s base price.
In her prepared testimony, released by the committee Wednesday, Retzlaff insists that Turing’s business practices “have found a way to fund innovative research for a neglected disease.” She also says the company has created special programs to help some patients pay for the drug, including the uninsured, and declares that “the company has and will continue to offer comprehensive patient assistance programs to ensure all patients can access Daraprim regardless of ability to pay.”
Privately, she has shown more concern about the financial assistance. In emails released by the committee, Retzlaff said that doctors might substitute cheaper medications for Daraprim, and said it was important to help patients with their out-of-pocket costs so that didn’t happen.
But Retzlaff also worried about spending too much on that kind of financial assistance. “I’m concerned that payers may begin denying coverage as a matter of principle or in response to the media fire storm,” she wrote in a September 2015 email. “I agree that patient access needs to be the priority, but we can’t afford to give free drug to commercially insured patients.”
Also appearing before Congress will be Howard Schiller, the interim chief executive officer of Valeant Pharmaceuticals. He took over earlier this year after CEO Michael Pearson was hospitalized with severe pneumonia.
According to his advance testimony, Schiller will highlight the steps he says Valeant has taken to address the widespread criticisms of its pricing of Isuprel and Nitropress — two heart medications used by hospitals — including creating a partnership with Walgreens (WBA) to help patients save money and offering discounts to hospitals that buy large amounts of the drugs.
“Where we have made mistakes, we have listened to the criticism and are taking steps to change,” Schiller says in his prepared testimony, while acknowledging that “we have more to do.”
That’s similar to the tone Schiller and another Valeant executive struck in a CNBC op-ed earlier this year, in which they acknowledged that “we have not gotten everything right.”
But even Schiller has acknowledged the importance of charging high drug prices. In a May 2015 email released by the committee, Schiller told Pearson that prices drove a large percentage of Valeant’s growth: “Last night, one of the investors asked about price vs volume for Q1,” Schiller wrote. “Excluding marathon, price represented about 60% of our growth. If you include marathon, price represents about 80%.”
How’s that generic drug backlog?
The committee Republicans, led by Chairman Jason Chaffetz of Utah, don’t just want to bash the drug company executives. They also want to grill the FDA to find out what it’s doing to reduce a backlog of generic drugs that are awaiting approval by the agency.
Those questions will be aimed at Janet Woodcock, the director of the FDA’s Center for Drug Evaluation and Research. In her prepared testimony, she says the agency “is well ahead of schedule” toward its goal of significantly reducing the backlog, “and our ultimate goal of eliminating it.”
Woodcock also insists that “any concerns about delayed competition in the generic space pertain to prior years, when our backlog was accumulating.”
Republicans generally argue that more competition in the marketplace will naturally hold down drug prices, especially if more generic drugs are available. According to the committee, 3,800 generic drug applications are still awaiting FDA approval.
The FDA, however, argues that part of the problem comes from sloppy applications from drug makers that are missing key information, which tends to slow down the rest of the approval process.
Can’t the benefit managers take care of it?
Republicans also hope to focus on the role of pharmacy benefit managers, who administer prescription drug plans and negotiate discounts for the individual plans. That’s why they’re calling in Mark Merritt, the president and chief executive officer of the Pharmaceutical Care Management Association, which represents the benefit managers.
Merritt’s group argues that the benefit managers can use some tools to lower prices, but that there needs to be more overall competition in the marketplace. In his prepared testimony, he recommends placing a higher priority on approving drugs that are designed to compete with the most expensive ones — as well as reducing the FDA’s backlog of unapproved generic drugs.
Will there be any hints of a Republican solution?
There’s little mystery about what committee Democrats want to do to solve the problems. The top Democrat on the committee, Representative Elijah Cummings of Maryland, has introduced legislation to bring down costs by allowing Medicare to negotiate drug prices, cracking down on fraud by drug companies, and allowing cheaper medications to be imported from Canada. It wouldn’t be shocking to hear about him talk about the bill at the hearing. (The other sponsor, Senator Bernie Sanders of Vermont, is currently on the presidential campaign trail in New Hampshire.)
The bigger question is whether Chaffetz, or any other committee Republicans, will drop hints about what solutions they would prefer. They’ve had a harder time reaching a consensus than the Democrats, but if they talk a lot about particular policies to increase competition — like overhauling the FDA — that could be a signal that they’re starting to get on the same page.