Math? Evicted from my mind palace long ago on grounds of being the worst. Solve for x? I can’t and I won’t. Numbers as a concept? Get out of my house. Unless of course you came with California representative Katie Porter. In that case, please make yourself right at home.
Porter, you see, used basic but effective math to flummox and fluster a Big Pharma CEO during Wednesday’s House Oversight Committee hearing on hyperinflated drug costs. For 18 months, the Committee has investigated two drugs in particular: Teva’s Copaxone, used to treat multiple sclerosis, and Celgene’s Revlimid, used in cancer treatment. They found that Teva spiked the price of Copaxone 27 times since 2007, and that its annual cost has ballooned from $10,000 in 1997 to nearly $70,000 now. Similarly, Revlimid’s price has been raised 23 times since 2005 when it cost $215 per pill. When Bristol Myers Squibb acquired Celgene late last year, a single pill cost $719; now, it costs $763.
The reason for all these price spikes is not research and development, the Committee contends, but pharmaceutical executives’ desire to line their pockets and meet their profit goals. Allow Porter to explain.
Using the same whiteboard she deployed against CDC leaders in March to get them to pay for coronavirus testing, Porter laid out some figures for former Celgene CEO Mark Alles. Charting the drug’s steady price rise over 15 years, she asked: “Did the drug start to work faster? Were there fewer side effects? How did you change the formula or production of Revlimid to justify this price increase?” Alles conceded that the company hadn’t adjusted the formula and admitted they’d found more patients who might benefit from Revlimid. Which is where Porter really went in.
“Do you know what this number is? Does it ring any bells?” she asked Alles, writing “$13 million” on the board. Alles guessed that she might be referring to “[his] compensation in some way,” which was correct. That’s how much he made in 2017, and by Porter’s calculations, that breaks down to “200 times the average American’s income” and 360 times the average senior’s Social Security payment. According to Porter, roughly $2.1 million of Alles’s salary came from Celgene hitting its annual earning targets, which also influenced the CEO’s bonus.
“The Oversight Committee found that if you hadn’t increased the price of Revlimid, you wouldn’t have gotten your bonus,” she charged. But the company did, and according to Porter, Alles received a $500,000 bonus over two years “just by tripling the price of Revlimid.”
“So, to recap here, the drug didn’t get any better; the cancer patients didn’t get any better; you just got better at making money,” she said. “You just refined your skills at price gouging.”
Quite possibly the spiciest use of math ever recorded in a congressional hearing.