Novartis, Amgen and Mallinckrodt used aggressive price hikes to meet sales goals, congressional probe finds

Congress at night
Execs with Novartis, Amgen and Mallinckrodt head to the U.S. Capitol today for drug pricing testimony. (Getty Images)

Novartis, Amgen and Mallinckrodt relied on routine price hikes to meet their financial targets—and, to make sure they could keep increasing prices, they worked to inhibit competition and keep their monopoly pricing power, a congressional committee said Thursday as hearings continued on Capitol Hill.

Amgen’s pricing decisions “were driven primarily by the need to meet increasingly aggressive revenue targets,” the House Committee on Oversight and Reform wrote in a 41-page report detailing actions on its immunology drug Enbrel and thyroid med Sensipar.

For Mallinckrodt, executives raised prices on H.P. Acthar Gel “as high as possible” to meet financial goals, the committee wrote in a 50-page report. And Novartis, marketing the lucrative cancer med Gleevec, raised prices aggressively while seeking to maintain "public pushback," a 46-page report found.

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The reports follow an in-depth look at years of price hikes by cancer specialist Celgene, now owned by Bristol Myers Squibb, and generics giant Teva.

For its part, Novartis aimed to keep Gleevec price increases below a "10% threshold," which, the committee wrote, "appears to have been intended to minimize public pushback." But years of incremental increases added up: Since launching the cancer drug in 2003, Novartis has raised Gleevec's price 22 times to $123,000 for a yearly course.

Novartis also "used several anticompetitive tactics" to delay Gleevec competition and minimize losses after generics launched, the probe found. The company used regulatory procedures, "pay for delay" deals and exclusive contracts to protect its brand against the competition.

A Novartis spokesman said the company spends an “enormous amount of resources” on R&D, but that it recognizes “innovations are immaterial if patients cannot afford them or otherwise access them.” The company prices medicines in “consideration of the value they bring to patients and society," he added. 

After Gleevec went generic in 2016, Novartis "offered steep discounts ... and continued to do everything possible to try to ensure that anyone who needed Gleevec but couldn’t afford it still got it," the spokesman said. 

Meanwhile, Amgen was taking repeated price increases, too. The company raised prices on immunology drug Enbrel 27 times after acquiring the rights in 2002—for a total increase of 457%. The drug now costs $72,240 annually. And the company raised Sensipar prices more than 20 times after its 2004 launch, the probe found.

Aside from its efforts to meet aggressive revenue targets, Amgen used a strategy of “shadow pricing,” routinely following competitor AbbVie’s price hikes on Humira, the committee found. Rather than pricing Enbrel below Humira to gain market share, Amgen “consistently” followed AbbVie’s increases and used the rival company’s moves as justification for its own, the report said.

To maintain its ability to charge high prices, Amgen also used “anticompetitive tactics” to keep rivals at bay, the probe found. On Enbrel, Amgen “used minor changes to Enbrel’s design—including a new version of the injection device called Enbrel Mini with Autotouch—to drive sales and limit competition,” the committee said. And on Sensipar, the drugmaker entered into settlement agreements to delay generic launches. 

An Amgen spokeswoman said the company appreciates "the opportunity to share our views on how best to ensure that innovative medicines ... are accessible and affordable to the many patients who need them."

The company is “committed to working with Congress, the Administration and other stakeholders to advance market-based reforms that will promote competition and improve patient access to therapies without stifling innovation in the U.S.,” she added.

And then there's Mallinckrodt, which purchased Acthar-maker Questcor in 2014 aiming to turn the drug into a blockbuster in part through aggressive outreach to doctors, the committee found. Because it had also acquired the rights to Acthar's closest competitor, Synacthen, Mallinckrodt “expected little to no competition” for the med, the committee wrote. Mallinckrodt later paid $100 million to settle similar allegations with the Federal Trade Commission.

RELATED: Mallinckrodt’s Acthar drama continues with $100M FTC settlement 

When Mallinckrodt execs were considering 2018 price increases between 7% and 9.9%, an exec wrote that “any price increase obviously has positive results.”

“Really comes down to what we are comfortable with externally,” the exec added. “Personally, I would go high. We will receive the same press regardless within these ranges.” 

In all, the drug's price has grown almost 100,000% since Questcor acquired its rights in 2001. Prices were high when Mallinckrodt made the deal, the committee points out, and grew afterward.

When Mallinckrodt management prepared a 2018 strategic presentation to the company’s board, execs initially referred to Acthar as a “cash cow” in the document. One exec wondered whether the language was appropriate, and a later version of the presentation called the drug a “profit maximizer.”

A representative for Mallinckrodt said the company has invested $660 million since the Questcor buyout to build clinical data, and that the drug's price has grown about 5% annually since the deal. The drugmaker doesn't know of any U.S. patients who were prescribed the drug and could not get treatment due to an inability to pay. Acthar's net price fell in 2019, he added, and the company expects the trend to continue this year.

For all three companies, executive pay plans incentivized the price hikes, the committee concluded.

The committee is releasing its findings after the late Rep. Elijah Cummings started a broad probe in January 2019. Lawmakers and staff reviewed 400,000 pages of internal documents from Amgen, 140,000 pages from Mallinckrodt and 100,000 pages from Novartis to inform the reports. Execs for the drugmakers are heading to the Capitol today to testify.

Thursday's reports follow similar documents, released on Wednesday, about actions by Celgene and Teva.

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