Bristol Myers Squibb and Celgene got a beating in Congress on drug prices—but only Congress can fix the problem

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Good afternoon, readers.

Drug pricing is in the headlines once again. This time, Celgene and parent company Bristol Myers Squibb are in the spotlight.

The United States is one of the only countries in the world that mismanages checks and balances on drug prices. It’s what drives economic anxiety for patients who have chronic illnesses and have to reload on their supply every month without knowing if a company may arbitrarily raise its prices.

It’s an issue that afflicts the most afflicted. Harmed most are those who depend on the biopharma industry’s admittedly remarkable innovations but may not be able to get their hands on treatments because of a labyrinth of middlemen, a lack of transparency, and a deference to the most powerful players.

The Food and Drug Administration (FDA) can only judge a drug by safety and efficacy standards—and those standards don’t necessarily mean that an approved drug is a whole lot better for you than others already on the market.

Cost-effectiveness is out of the agency’s purview. In short: Drug makers can charge you whatever they want if their therapy makes it past the regulatory green line. And they’re free to hike prices whenever they want, too.

Big pharma companies like to argue that this is the cost of innovation. Hey, if we can’t raise prices every single year for a drug we developed a decade ago which took hundreds of millions of dollars to create, how can we develop more in the future?

This is a uniquely U.S. position. Pretty much no other country buys it. And we got to witness a tangible case study about this dilemma, and the moral hazard it presents, during a Congressional probe on Wednesday focusing on Celgene, the biotech that was snatched up in a massive deal by Bristol Myers Squibb late last year.

Celgene’s cancer drug Revlimid saw massive price hikes year-over-year in order to reach sales targets, according to a scathing Congressional probe on Wednesday.

Revlimid was first approved in 2005. Yes, 15 years ago. It’s an important treatment which has helped patients with a rare form of blood cancer called multiple myeloma. It hasn’t changed on a biological or molecular level since then—yet, curiously, its price kept rising, as Congresswoman Katie Porter of California said in searing questioning on Wednesday.

Porter pointed out that Celgene had a structure set up where executive compensation was tied to sales goals for Revlimid. In fact, the drug’s price has been hiked 20 times in the past few decades in order to make up for lagging sales by Celgene, according to an extensive investigation by the House Oversight Committee.

Those are the kinds of facts that will outrage the public. But the larger issue is that Celgene, under the law anyways, did nothing wrong. Congress called them out. But Congress is also the only entity that can fix the problem.

Read on for the day’s news, and see you next week.

Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy

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