WASHINGTON (CN) — House Democrats accused pharmaceutical companies Friday of getting away with murder through skyrocketing drug prices, rejecting Republican lawmakers’ concerns that increased regulation to bring down the cost of prescription drug prices could stifle innovative research.
Representative Alexandria Ocasio-Cortez, D-N.Y., said during a House Oversight Committee hearing that every dollar invested in drug research is well spent — but took issue with drug companies spending $516 billion from 2006 to 2015 in stock buybacks versus $465 billion in research.
“When a company buys their own stock, it drives up the price of their stock,” she explained. “Something that is not talked about is that CEO pay is tied to stock price. So CEOs right now are not incentivized to invest in research and development. They are incentivized to raise their stock price.”
Ocasio-Cortez argued that eliminating stock buybacks, which were illegal in the U.S. until 1982, could cut the cost of drugs in half.
California Democrat Mark DeSaulnier also blamed drug companies for monopolizing the industry by filing new patents on old drugs.
More than 70% of patents filed each year are on drugs already on the market, DeSaulnier said.
Prescription patents keep information out of the hands of competitors who could provide patients with generic drugs at a significantly lower cost.
“These people shouldn’t be executives. They should be in prison,” DeSaulnier added.
David Mitchell, founder of Patients for Affordable Drugs, told the committee his life depends on whether Congress reforms patent law and ends monopoly drug pricing.
Suffering from an incurable blood cancer, Mitchell visits a clinic every two weeks for a drug infusion. The cost: $650,000.
“You guys really have got to stop this abuse that allows them to milk all drugs by gaming the system, instead of doing what we need them to do, which is to invest in innovation and new drug development,” he said.
Mitchell was one of four witnesses before the committee Friday, all burdened by soaring drug costs. Their stories brought many members to tears.
Humira, the world’s top selling prescription drug, costs Ashley Krege more than her car payment, grocery bill and private business insurance.
The drug worked, she told the committee, keeping at bay skin lesions and muscle aches. But then the price went up from $753 to $1,100 a month.
“I had to make the difficult decision to wean myself of the drug that had provided me months of relief,” Krege said. “I couldn’t afford the 40% price increase.”
Sa’ra Skipper similarly shared how she cannot afford the insulin to treat her diabetes. For years she shared vials with her sister, who also suffers from the illness, reducing their doses to life-threatening levels.
Laura McLinn echoed Republican members’ concerns, warning lawmakers not to overregulate, but she still recognized the alarming prices of drugs.
“Please do not make decisions that will impact the innovation and squelch that,” said McLinn, the mother of a 10-year-old boy undergoing experimental treatment for a rare muscle disorder.
Congressman Jamie Raskin, D-Md., recognized McLinn’s concern but pointed out that the National Health Institute invests more taxpayer dollars in research than any private drug company.
“When they come up with breakthroughs, those scientific inventions and discoveries are used by these companies,” Raskin said.
Mitchell agreed with Raskin that because taxpayers invest in research that leads to new prescription drugs they should have negotiating power on pricing.
But he also encouraged the committee not to end tax breaks for drug companies that do fund medical studies like the one McLinn’s son is undergoing.
“Keep it going,” Mitchell said. “I need new drugs or I am going to die.”
Ranking Republican Jim Jordan of Ohio agreed Congress should stop the abuse of the patent system.
But he cautioned against excessive government intervention, saying some colleagues on the other side of the aisle have “gone so far to embrace socialism as the answer to this problem.”
Still, Chairman Elijah Cummings, D-Md., said he was encouraged by bipartisan determination to reduce drug prices, and shared about his first conversation with Donald Trump after the president took office.
“He said the drug companies are getting away with murder,” Cummings recalled. “And he’s right.”
He closed the hearing assuring the patients testifying before the committee that he plans to call pharmaceutical executives to testify when Congress returns from recess in September,
“I watched our members cry. I watched you all cry. And it’s because there is a tremendous pain that comes with hearing your stories,” Cummings said. “I think for most of us your pain is our pain, your dreams are our dreams, your hopes are our hopes. I just wanted to encourage you to keep forging on.”