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

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.

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 “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.

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.

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. 

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 its med, the committee wrote. Mallinckrodt later paid $100 million to settle similar allegations with the FTC.

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

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

“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.” 

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.”

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.

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