To the dismay of congressional investigators, Abbott Laboratories and two other drug companies will not be appearing before a U.S. House committee delving into pricing and marketing practices, the committee said Thursday.
Members of a joint investigative subcommittee of the House Energy and Commerce Committee on Friday will hold hearings on a flawed payment system that investigators say has allowed drug companies to inflate prices charged to Medicare, the federal health insurance program for the elderly.
While at least 20 drug companies have been known to be under either state or federal scrutiny for pricing practices, North Chicago-based Abbott, Bayer Corp. and Dey Inc. were asked to testify because “these are three companies about which there have been publicly disclosed civil or criminal prosecutions,” said Rep. James Greenwood (R-Pa.), chairman of the Energy and Commerce health subcommittee.
All three declined the invitation.
“It’s a mistake for them not to come,” Greenwood said of the drug companies. “I am annoyed that they are not coming.”
The committee’s investigation is one of several pharmaceutical pricing inquiries undertaken since the early 1990s as regulators and policymakers grapple with a central flaw in the way Medicare and federal-state Medicaid health insurance programs for the poor pay for drugs.
Such programs allow drugmakers to set the price higher than what many private sector customers would pay.
In a letter to committee members earlier this month, Abbott Vice President of Government Affairs Mark Barmak said that company officials “do not believe that we would be able to provide any real insights that would be of value to the committee.”
Abbott affiliate TAP Pharmaceutical Products Inc. of Lake Forest is under investigation by prosecutors in Boston with respect to the methods it used to market Lupron, a leading prostate cancer drug.
Bayer, a unit of Germany’s Bayer AG, declined to comment.
Dey, based in Napa, Calif., indicated in a letter to the committee that its chief executive would be willing to testify in the future if a panel of CEOs were assembled.
Congressional investigators last year said they found evidence that drugmakers listed inflated prices that were used to set Medicare reimbursement, but sold their products to doctors at a discount, hoping physicians would choose one treatment over another. This so-called AWP, or average wholesale pricing system, is said to have resulted in overpayments by government insurers of more than $1 billion annually.
Because of such overpayments, committee members say, reform of the system of drug pricing to providers of medical care has taken on a greater urgency, especially since Congress is under increasing political pressure to greatly expand drug coverage by Medicare for the nation’s nearly 40 million elderly and disabled.
Medicare does not pay for most prescription drugs, but the program does cover about 50 medications, mostly cancer treatments that are administered in a doctor’s office.
“What we know is this AWP system is a joke and a travesty,” Greenwood said.
