A top official at pharmaceutical giant Johnson & Johnson dismissed questions on a recent earnings call about the drug price reform debate in Washington, saying that the company is “responsible” in its pricing.
As part of the question and answer period during the company’s third quarter earnings call in October, one questioner asked Johnson & Johnson Chief Financial Officer Dominic Caruso where he sees the drug pricing reform debate in Washington going and if the company was planning a pledge, similar to one made by many firms in the 1990s, to not raise drug prices beyond the cost of inflation.
“Despite significant media attention on drug pricing, there really isn’t a consensus on policy solutions that would lower prices without negatively lowering innovation,” Caruso said.
After recalling the industry’s collaboration on the Affordable Care Act, Caruso then told the questioner that the “real answer to this dilemma is to monitor and provide outcome-based metrics and not simply focus only on price.”
Finally, Caruso, in response to a question about the industry voluntarily restraining the prices of its own drugs, explained that he would rather focus on justifying the current prices of drugs. “I think we’re very responsible in our drug pricing. And we tend to support the price of our drugs with strong economic data,” he said. “So rather than pledge to a particular number I think it’s important that we continue to develop robust data that provides a solid foundation for the value that our products provide the health care system.”
Listen to Caruso’s full remarks below:
“Johnson & Johnson’s justification for their prescription drug prices are outrageous,” Vijay Das, a health care advocate at Public Citizen, told The Intercept in response to Caruso’s comments to investors. “Sick patients and taxpayers are held hostage in order for the drug maker to extract extreme profits.”
Das pointed to investor documents Johnson & Johnson uploaded that show the company spent 12.6 percent of its total sales in research and development, compared to 26.6 percent it spent on selling, marketing, and administrative expenses. This means the company was spending twice as much on marketing and sales as on actually developing the drugs.
Johnson & Johnson has gained notoriety for the high cost of its drugs. For example, it produces and markets the cancer drug Imbruvica, which retails at around $9,550 for one bottle of 90 capsules. Dosage is four capsules a day, meaning one bottle will be a 22-and-a-half-day supply.
At this average price, a full-year supply would cost $154,922.
Another drug it produces, Olysio, is used to treat Hepatitis C. This drug retails at around $22,000 on the low end for around a month’s supply (see daily dosing here). Altogether, that equals $264,000 for an annual supply.
“Hepatitis C treatment costs are forcing state governments to consider rationing care for their Medicaid and prison rolls,” said Das. “Instead of simply charging less, this industry is outdoing itself every year, extracting huge profits at the expense of our poor and sick.”