House committee uncovers how Humira’s price spiked by 470% as AbbVie execs cashed bonuses tied to the hikes
Prior to the House Committee on Oversight’s grilling of AbbVie CEO Richard Gonzalez on Tuesday, the committee staff released a 57-page report following a two year investigation into how and why the company spiked the price of Humira (adalimumab) and made it the highest-grossing drug of all time.
While the committee investigation and public lashing aren’t likely to do actual damage to AbbVie’s bottom line or bring new Humira biosimilar competition before 2023 in the US, the report digs into how AbbVie used more than two dozen price increases, shadow pricing with Amgen’s blockbuster Enbrel, and patent thickets to block competition while amassing more than $170 billion in net revenue from Humira since 2003.
Reps. Carolyn Maloney (D-NY), chair of the Oversight Committee, Jarrold Nadler (D-NY), chair of the House Judiciary Committee, and subcommittee chair David Cicilline (D-RI) also sent a letter to the Federal Trade Commission on Tuesday, calling for a formal inquiry into AbbVie’s actions to delay the entry of Humira biosimilars in the US (more on the delays below).
Nearly a decade after Abbott Laboratories first launched Humira in 2003, the list price rose from $522 per 40-milligram syringe to $1,024 by 2013, with 13 price hikes, prior to spinning off AbbVie as a separate company. Under AbbVie, the price of Humira spiked another 14 times, including by 30% within a 10-month window.
“Humira is now priced at $2,984 per syringe, or $77,586 annually — a 470% increase from when the drug entered market,” the report says.
And those consistent price hikes were driven by executive bonuses from 2015 to 2018, which were directly linked to Humira’s financial performance, the report says.
In that first year that the incentives were created, execs pushed Humira’s US net revenue to rise from $6.5 billion in 2014 to $8.4 billion in 2015, after AbbVie executives implemented a 9.9% price increase in April 2015 — the largest-ever price increase for the drug — and a 7.9% price increase in August 2015.
While Gonzalez will likely tell Congress Tuesday that the price increases were used to fund more research & development, the committee shows that wasn’t the case.
“AbbVie’s total research and development expenditures for Humira represented only a small fraction of its net revenue from this drug. In response to the Committee’s request, AbbVie identified a total of $5.19 billion in ‘Humira Research & Development’ between 2009 and 2018 — approximately 7.4% of its Humira U.S. net revenue and 4.2% of its Humira worldwide net revenue over that period,” the report shows.
What the US would’ve saved
The report also tracks how much the US government could’ve saved overall by factoring in some of the discounts that some federal departments receive. Overall, AbbVie’s Humira net revenue from Medicare — a figure that subtracts discounts and rebates— was $9.9 billion from 2010 to 2018.
“If Medicare had received the same discounts as the Department of Defense, it would have saved more than $7.4 billion on Humira from 2010 to 2018. Similarly, if Medicare had received the same discounts as the Department of Veterans Affairs, it would have saved $7 billion on Humira from 2010 to 2018,” the report notes.
Republicans in Congress have focused their attention less on lowering drug prices and more on lowering out-of-pocket costs, the report reveals how out-of-pocket costs for Humira have spiked too.
A 2019 Kaiser Family Foundation study found that the median annual out-of-pocket cost for Medicare patients on Humira was $5,471 in 2019, which is $606 more than in 2016.
A retired teacher and Medicare beneficiary with Crohn’s disease told the committee that despite having a supplemental health insurance plan, her out-of-pocket costs for Humira were more than $2,600 for a month’s supply, preventing her from receiving treatment.
Rockford, Illinois Mayor Tom McNamara also reported that between August 2013 and July 2020, his city spent more than $2.5 million on Humira alone, which means more than 5% of the city’s employee health plan expenditures were for Humira.
Don’t blame the player, blame the game?
In addition to raising the price, AbbVie also halted any potential competition until 2023 (despite the launch of Humira biosimilars in Europe in 2018), and that suppression occurred even beyond AbbVie’s own internal projections.
In February 2014, according to the committee report, AbbVie executives circulated a presentation on “US Humira Biosimilar Erosion” that projected that three to five biosimilar competitors would enter the market by the first quarter of 2017.
What’s more, AbbVie’s patent on Humira’s active ingredient expired on December 31, 2016.
“At that time, competitors should have been free to enter the market. However, the company exploited the patent system to obtain or apply for over 200 additional patents on Humira to block biosimilar competition,” the report says.
Amgen’s blockbuster biologic Enbrel, which won’t see biosimilar competition in the US until 2029, is also one of Humira’s top competitors, and the committee showed how the two companies raised the prices of their drugs in lock-step with each other.
“Internal AbbVie documents obtained by the Committee reveal that the company viewed Amgen’s price increases as providing cover for its own price increases. For example, one company executive reported to the current CEO and then-Executive Vice President Richard Gonzalez that it was a ‘Great week-end’ after learning that Amgen had increased the price of Enbrel on January 20, 2012, to $25,150 annually. The email thread noted that earlier that month, AbbVie had increased the price of Humira to $24,913 annually. In July, AbbVie would top Amgen again by raising the price of Humira to $26,632. Less than 3 weeks later, Amgen followed suit with another price increase,” the report says.