U.S. lawmakers on Tuesday took the CEO of the maker of the world's bestselling drug to task for high product prices, with Rep. Katie Porter using her famed "Whiteboard of Justice" to demonstrate what she called "the Big Pharma fairy tale" that pharmaceutical research and development costs justify perpetual price hikes.
"The Big Pharma fairy tale is one of groundbreaking R&D that justifies astronomical prices. But the pharma reality is that you spend most of your company's money making money for yourself and your shareholders."
—Rep. Katie Porter
Members of the House Oversight Committee grilled AbbVie CEO Richard Gonzalez—whose total compensation topped $24 million last year (pdf)—about the reasons for increasing the price of its top-selling drug Humira to $77,000 for a year's supply.
Humira (adalimumab) is an immunosuppressant used to treat a wide range of inflammatory conditions including arthritis, Crohn's disease, psoriasis, and ulcerative colitis. Last year, Humira sales neared $20 billion, making it by far the world's bestselling pharmaceutical drug.
In January, Fortune reported AbbVie would raise the price of Humira by 7.4%. Why the increase? Drugmakers often claim higher prices are needed to fund research and development. AbbVie spent a total of $2.45 billion on R&D from 2013 to 2018.
Porter (D-Calif.) pointed out that the company spends nearly double that—$4.7 billion—annually on advertising.
When Porter asked Gonzalez how much the company compensates its executives, the CEO said, "About $60 million a year."
"Try $334 [million] on for size," Porter shot back.
Noting that AbbVie spent around $50 billion on cumulative stock buybacks and dividends from 2013 to 2018, Porter then told Gonzalez: "You're spending all this money to make sure you make money rather than spending money to invest in [and] develop drugs and help patients with affordable, lifesaving drugs."
"You lie to patients when you charge them twice as much for an unimproved drug, and then you lie to policymakers when you tell us that R&D justifies those price increases," Porter asserted.
"The Big Pharma fairy tale is one of groundbreaking R&D that justifies astronomical prices," she said. "But the pharma reality is that you spend most of your company's money making money for yourself and your shareholders."
"The fact [is] that you're not honest about that with patients and policymakers—that you're feeding us lies that we must pay astronomical prices to get 'innovative' treatments," added Porter. "The American people, the patients, deserve so much better."