Biotech and Pharma

Johnson & Johnson CEO defends drug prices, calls for changes in how medical costs are covered

Key Points
  • Johnson & Johnson CEO Alex Gorsky defended drug prices while saying they way they are paid for needs to change.
  • President Donald Trump has tried to publicly shame drug companies into lowering prices.
  • Pfizer last week delayed drug price increases after Trump said on Twitter that Pfizer "should be ashamed" of itself.
Alex Gorsky, chairman and chief executive officer at Johnson & Johnson.
Christopher Goodney | Bloomberg | Getty Images

Johnson & Johnson CEO Alex Gorsky called for changes in the way prescription drugs are paid for but stopped short of saying pharmaceutical companies need to lower the prices they charge.

President Donald Trump has forcefully pressed pharmaceutical companies to reduce prescription drug costs in recent weeks. Pfizer last week delayed drug price increases after Trump said on Twitter that the drugmaker "should be ashamed" of itself. The spat flung pharmaceutical companies back into the spotlight.

Pressure has been mounting on drugmakers to cut prices for lifesaving medicines since "Pharma Bro" Martin Shkreli sparked public outrage for in 2015 raising the price of a little-known but important drug used to treat an HIV-related infection from $13.50 to $750 per pill. Mylan then made the issue a focal point of the 2016 federal elections after it raised the cost of its lifesaving EpiPen 500 percent since 2007.

More quietly, some patients are facing higher costs for everyday drugs like insulin as well as for costly, complex biologic drugs.

Gorsky addressed the issue on a call with analysts Tuesday after the release of J&J's second-quarter results. He said the company knows "people are facing higher out-of-pocket costs when they seek medical care from a hospital, a doctor's office or some other alternative health-care provider, and especially when they go to the pharmacy to get medications."

Drugs, however, represent a fraction of the country's health-care costs, Gorsky said. Plus, he said, they address health issues and reduce morbidity rates.

"We also believe changes are needed regarding how we cover and pay for medical care and drug treatment therapies in the U.S," Gorsky said. "We are working with various partners in the health-care system to transform the way health care is paid for so everyone involved is held accountable and rewarded for the value they deliver."

The White House released a blueprint of its plan to lower drug prices in May. While light on specifics, the plan seeks to increase competition, improve negotiation, and create incentives to lower list prices of prescription drugs and out-of-pocket costs for consumers.

"It's too early to predict the impact of any potential new federal regulations, but it's an important issue. We recognize that, and we want to help lead the solutions," Gorsky said. "We know that it's our responsibility and we will continue to unite around efforts that address some of the most critical health and consumer needs of people around the world."