Pharmaceutical Titan’s Senate Bid Will Test Voters’ Views on Drug Prices

  • Former Celgene CEO, a donor to Trump, sets sights on Senate
  • Rising costs draw ire, but an attack may fizzle in New Jersey

Bob Hugin helped build a pharmaceutical powerhouse. As he seeks to claim the seat of an embattled Democratic senator in New Jersey, that legacy could be both a blessing and a burden.

Raised in Union City, a blue-collar town at the mouth of the Lincoln Tunnel, Hugin, 63, was the first member of his family to go to college. Princeton was followed by the Marine Corps and a successful stint on Wall Street. He left in the dot-com era to join what was then a small and, as Hugin tells it, near-bankrupt biotechnology firm.

Robert Hugin

Photographer: Andrew Harrer/Bloomberg

That company, Celgene Corp., is now the $72 billion maker of one of the most successful cancer drugs in history -- and a symbol of some of the drug industry’s most-criticized business practices.

Drug companies have enormous political sway in New Jersey, where 117,260 people worked in the industry, as of 2016. Hugin is so identified with Celgene’s ascent a corporate campus in suburban Summit was renamed for him after he retired as chairman this year. He has established himself as a generous donor to Republican candidates, and a fundraiser for President Donald Trump.

The Democratic incumbent, Senator Robert Menendez, faced a federal corruption trial last year that ended in a deadlocked jury, with the charges were later dropped. While Menendez is vulnerable, Hugin could face a tough task. 

Pushing Prices

During his time at the helm, Celgene increased drug prices while fighting to prevent lower-cost versions of its products from reaching the market. It spent millions lobbying to stay on the right side of Washington, though far less than some other drugmakers. Most recently, the company has been faulted for the high cost of its blockbuster blood-cancer treatment Revlimid, and for using a drug-safety program to shield the treatment, which can cost more than $200,000 a year, from competition.

Trump himself has said drug companies are “getting away with murder.”

Last week, as he stood in Springfield’s Elks Lodge in front of a crowd that included failed New Jersey gubernatorial candidate Kim Guadagno and Representative Leonard Lance to launch his run, Hugin was unapologetic.

“I am so much of a better person because I worked at Celgene,” he said. The company “has transformed multiple cancers to chronic disease,” he said, and “is on the verge of curing several cancers.”

Celgene is best-known for Revlimid, a drug that was first approved 12 years ago. Since hitting the market, it’s been the company’s top seller, bringing in $8.2 billion in sales last year alone.

In the last quarter of 2007, when Hugin was chief operating officer, a 10-milligram dose cost $247.28, according to Connecture Inc. data. Over the next decade, Celgene raised its price more than a dozen times as Hugin became chief executive officer and eventually executive chairman. When he retired from that role in January, the same pill cost $662.36.

“The price of Revlimid today allows sustainable investment in research and development for the new medicines Celgene is developing for tomorrow,” the company said. The company said that it puts about 40 percent of sales back into research efforts.

A Costly Treatment

While the drugmaker offers assistance to some patients, people across the country have often struggled to afford the company’s price increases, despite assistance programs.
Jackie Trapp needs Revlimid to survive. Medicare will pick up most of her tab -- equivalent to more than the cost of a typical house in her Wisconsin neighborhood -- but Trapp expects her out-of-pocket expenses will be about $19,000 this year, before any aid. The retired public school teacher recently took a home-equity line of credit to help with her medication costs. 
Not all patients share Trapp’s experience. At the christening in February of a new Celgene facility in the state, two cancer patients were on hand to thank the company for its advancements. Hugin’s campaign strategist Chris Russell defends his record, and said that Hugin will push to improve the U.S. health-care system. 

“Treating and curing cancer isn’t cheap. It’s impossible to put a price on someone’s life,” said Russell. “Bob understands the frustration, because he shares it.”

At the same time, Russell said, “there are countless other patients whose lives have been extended and their quality of life dramatically improved because of these medicines.”

Line of Attack

If Hugin wins the Republican nomination, Menendez, who has seen his poll numbers drop in the wake of his corruption trial, may have little room to attack his business record. The Democrat has accepted $865,000 in donations over his career from the drug industry, according to the Center for Responsive Politics.

That doesn’t mean he won’t try.

"Drug company CEO Bob Hugin has personally made millions by jacking up prescription prices and deceptively marketing products. Bob Hugin is the poster boy for why patients pay too much for the drugs they need while giant companies profit,” Michael Soliman, a political adviser to Menendez, said in an emailed statement.  

In early 2017, Menendez and fellow New Jersey Democratic Senator Cory Booker crossed party lines to vote against a proposal to allow lower-priced drugs to be imported from Canada. After the vote drew negative headlines, both issued statements saying they wanted to reign in the cost of prescription drugs and supported other legislation that would do so. Weeks after the vote, Booker introduced a bill that would allow Americans to import medications. 

Booker, a rumored 2020 presidential hopeful, has taken $400,000 from drugmakers since becoming a senator. In June, he said in an interview with National Public Radio that he’d put a pause on taking donations from the industry because “it arouses so much criticism.”

Attacks on drug companies may win little sympathy in the New Jersey suburbs where many who work in the industry reside. Joseph Elias, who lives in Celgene’s home base of Summit, said there are enough drug-industry people in the area that one of their own would likely have a political advantage. 

“I’ve had this discussion with people in pharma who say it’s not us, it’s the insurance companies,” said Elias, an immigration attorney. 

Sitting in a café in Summit’s downtown, which is dotted with the markers of New Jersey upper middle class life -- a Drybar, West Elm, direct train service to Penn Station -- Elias said, “I also hear the ‘well listen, we’re putting billions of dollars into research.’”

Fading Glory

Hugin’s exit from the company he helped sculpt into a giant coincided with a waning of its dominance.  

Celgene has struggled to find a successor for Revlimid, which accounts for nearly two thirds of its sales. Under pressure to address an expected revenue drain when the drug is opened up to generic competition, the company agreed to buy Juno Therapeutics Inc. in January for $9 billion. Juno makes a promising genetic cancer therapy that could someday be a big seller but is still at least a year from approval. 

Other efforts to plug the gap have fizzled. Last October, one of the company’s experimental drugs for Crohn’s disease failed in a late-stage trial, a setback that led to a $2.7 billion writedown in the fourth quarter.

That same day, Celgene raised the price Revlimid.

— With assistance by Robert Langreth, and Bill Allison

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