The price of Celgene Corp’s cancer treatment Revlimid, the second best seller among U.S. drugs, more than tripled since 2005 to $719 per pill as company executives pushed to meet revenue projections tied to their million-dollar bonuses.

Internal documents outlined 22 price increases under Celgene’s watch since Revlimid came to the market in 2005, approved to treat the blood cancer multiple myeloma. The gains were included in a staff report to be introduced in a two-day hearing by the House Committee on Oversight and Reform that starts today.

The panel has been probing drug pricing for 18 months. Its staff report highlights executive communications tying price increases to revenue projections and bonuses, despite the pharmaceutical industry’s messaging that the gains are necessary to fund research and new drugs.

At Celgene, the committee found that more than half of the formula used to award executive bonuses was dependent on meeting earnings and revenue targets. Some years, according to the panel’s report, those targets wouldn’t have been met without Revlimid price increases.

The year 2017 -- when Mark Alles, the chief executive officer, received a bonus of more than $2 million -- is cited as an example.

“Without three price increases on Revlimid that year, the Committee estimates that Celgene’s revenue would have been nearly $600 million lower and executives likely would not have achieved the revenue targets needed to receive their full bonuses,” according to the committee’s report.

Three years earlier, Alles, who was then a senior executive, discussed a desire to raise Revlimid’s price 4% in order to improve first-quarter performance.

“I have to consider every legitimate opportunity available to us to improve our Q1 performance,” Alles wrote in an email. He is expected to appear before the committee on Wednesday.

Bristol Myers Acquisition

Celgene was acquired by Bristol Myers Squibb Co. in November, and the price is now $763 per pill, the report found. Executives from Bristol Myers, Celgene and Teva Pharmaceutical Industries Ltd. are all set to testify on Wednesday.

The first day’s hearing is expected to focus on Revlimid and Teva’s multiple sclerosis drug Copaxone. At $7,114, the price of a monthly course of Teva’s original Copaxone is now almost 10 times as much as when it came to market in 1997, according the committee report.

Bristol Myers and Teva didn’t immediately respond to requests for comment.

Copaxone generated $1.5 billion in revenue last year, 16% of Teva’s total revenue. U.S. revenue from Revlimid in 2018 was $6.5 billion, 42% of Celgene’s U.S. revenue, according to data compiled by Bloomberg.

Teva executives also received bonuses tied in large part to company revenue, according to the panel report. In 2017, an unnamed executive told employees that generic competition for Copaxone had been delayed.

“Might be good for cash flow and debt pay down and some of your bonuses,” the executive wrote in an email obtained by the committee.

Price Negotiation

The committee report also highlighted instances where Celgene and Teva viewed the U.S. market as prime for the biggest price increases because Medicare, the health program for the elderly, isn’t able to negotiate drug prices.

In a 2016 presentation, a slide highlighted Teva’s ability “to increase prices successfully” which is “influenced heavily by US being allowed to hike prices.” The late Representative Elijah Cummings started the committee’s drug pricing investigation before he died in October. Cummings, a Democrat from Maryland, served as chairman of the panel and supported legislation to allow Medicare to negotiate drug prices.

U.S. President Donald Trump campaigned on lowering drug prices, though his administration has not had a big impact despite a flurry of last-ditch efforts leading up to the November election.

Earlier this month, Trump signed an executive order to tie prices paid by Medicare to drug pricing in other countries that do negotiate prices. The order is a first step that directs the Department of Health and Human Services to come up with such a payment model.

On Thursday, Amgen Inc., Mallinckrodt Plc. and Novartis AG executives will testify.