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The Pulse of the Pharmaceutical Industry

House Ways and Means Committee Holds Hearing on Drug Prices

Written by: | | Dated: Wednesday, February 13th, 2019


By Alex Keown


The rising costs of prescription medicine took center stage during a hearing held Tuesday by the Ways and Means Committee in the U.S. House of Representatives.

Lawmakers heard testimony from various players in the industry about the increasing out-of-pocket costs that consumers face when it comes to their prescriptions. The testimonies in the House committee hearing came on the heels of other hearings, and also precede a highly anticipated hearing in the U.S. Senate when the chief executive officers of Pfizer, Merck, AbbVie, Bristol-Myers Squibb Company and Johnson & Johnson are expected to testify. The heads of the companies will likely point to the rebate structure set through pharmacy benefits managers as the cause of increasing prices.

That was also where Ways and Means Committee Chairman Richard Neal, D-Mass, placed at least some of the blame. During the hearing, Neal noted that drug companies blame the PBMs, which place the blame on insurance companies, which then place the blame on others.

“The one group that is not the problem but is the biggest victim is indeed the patients,” Neal said, according to RAPS.

Neal added that Congress will need to take a “multi-pronged” approach to address high prescription drug cost, RAPS reported. Such an approach, he said, will have to involve changes at the US. Food and Drug Administration, Centers for Medicare & Medicaid Services and possible changes to the tax code.

During the Ways and Means Committee hearing, Joseph Antos, the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute, testified that the public should be concerned about the “total cost of health care, including payments made by patients and their health plans for drugs and other medical services.” Antos said Congress and stakeholders should work to ensure that the money spent on health care “produces real value for patients.”

In his testimony, which AEI has posted on its website, Antos told the committee members that not every issue regarding pricing can be solved through policy proposals, although they can “address some aspects of the overall problem of high drug costs.” He said a balanced policy agenda could be submitted as long as it includes certain core principles, including the promotion of competition between drugmakers to ensure lower prices. He also suggested promoting greater efficiency in the delivery of health services, along with “private sector solutions that can better adapt to changing conditions in the health market.”

The hearing in the Ways and Means Committee was conducted about two weeks after Health and Human Services Secretary Alex Azar floated a proposal to lower drug prices and out-of-pocket expenses by encouraging manufacturers to pass discounts to patients instead of insurers. The HHS plan is aimed at providing new transparency to the prescription drug market and remove the veil of hidden rebates and other pricing methods currently conducted between companies and pharmacy benefits managers.

Days after Azar announced his proposal, leaders from across the pharma industry offered their tentative support for the deal, at least until the nuts and bolts of the plan have been published. Stephen Ubl, president and chief executive officer of Pharmaceutical Research and Manufacturers of America (PhRMA) and Jim Greenwood, president and CEO of BIO, both came out in support of the proposal.

“This proposal would also help to fix the misaligned incentives in the system that currently result in insurers and pharmacy benefit managers (PBMs) favoring medicines with high list prices,” Ubl said. “These types of reforms will especially help patients with chronic diseases, such as diabetes patients who rely on insulin, who are often not benefitting from significant rebates and discounts.”



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