Senate Finance Committee and House Oversight Committee Take Aim at Drug Pricing
By Mark Terry
The U.S. Senate Finance Committee and the House Oversight Committee started hearings on Tuesday, January 29, focused on dealing with high drug prices.
In the Finance Committee hearing, chair of the committee, Sen. Chuck Grassley, (R-IA), began by saying tackling high prescription drug prices was a priority and attacked pharmaceutical companies for agreeing to speak privately at the hearing, but not publicly. “I want to express my displeasure at the lack of cooperation from the pharmaceutical manufacturers recently,” Grassley stated.
During the hearing, Grassley also vowed to do something about insulin price increases, stating, “I have heard stories about people reducing their life-saving medicines, like insulin, to save money. This is unacceptable and I intend to specifically get to the bottom of the insulin price increase.”
It’s a somewhat ironic point, given that it was only about two weeks ago that NBC reported on federal government employees being forced to ration their insulin because of the government shutdown because they could no longer afford their $300 copays. To be fair, the American Medical Association (AMA) has also called on the government to investigate rising prices for insulin, which in the U.S. has seen an almost 200-percent increase from 2002 to 2013.
At the House Oversight and Reform Committee hearing, Chairman Elijah Cummings (D-MD), also announced sweeping investigations of drug pricing and indicated he had sent detailed information requests to 12 major drug manufacturers.
The insulin market is dominated by Novo Nordisk, Sanofi and Eli Lilly. Alex Azar, the Secretary of the U.S. Department of Health and Human Services (HHS) was formerly an executive for Lilly. In a statement, Paris, France-based Sanofi said it understood that some patients were angry because they have not benefited from discounts that were negotiated with insurers and pharmacy benefit managers, but that it was cooperating with lawmakers.
The Associated Press notes, Sen. Ronald Wyden, (D-OR), “the ranking Democrat on the [Senate] panel, said Finance won’t hesitate to use its subpoena power. Despite the tough talk, Grassley’s opening statement underscored just how far he and most Republicans remain from Democrats like Cummings on policy ideas.”
Grassley’s approach is to generally call for a greater public accounting of how drug companies set prices and endorsed the Trump administration’s call to require pharma to disclose prices in advertising. Cummings, on the other hand, is calling for a package of bills that would allow Medicare to directly negotiate prices, open up generic drug competition, and allow for drug imports from Canada.
An op-ed in USA Today on Sunday by Ted Kaufman, a former Democratic U.S. senator from Delaware, stated, “Why do the pharmaceutical companies raise prices? Not because of increased manufacturing costs. And not because they have to cover additional research expenses, the excuse they trot out at every opportunity. They raised prices for only one reason: They could.”
Of course, part of the issue here has to do with the free market, government payers in the shape of Medicare and Medicaid, the complex role of pharmacy benefits managers (PBMs) who negotiate with drug companies and are expected to pass along some of their rebates—up to 40 percent in some cases—along to consumers, the costs of drug development, and the nature of international pharmaceutical companies, which are profit-making entities with responsibilities to their shareholders. Republicans often want to control drug pricing using free-market policies, despite healthcare not really behaving like typical free markets, whereas Democrats often want greater government intervention.
And don’t forget politics. Drug pricing was a hot topic in the 2016 election, and now that the 2020 presidential election is gearing up, drug pricing appears to be rising to the top of the debate again.
For example, just prior to declaring she was going to run for president, Senator Elizabeth Warren (D-MA), proposed The Affordable Drug Manufacturing Act, which would allow HHS to manufacture or contract out the manufacture of generic drugs.
A recent Politico-Harvard poll indicated that 90 percent of Democrats and 82 percent of Republicans “say taking action to lower prescription medicine prices is extremely important, ranking as the top issue for both parties.”
And with the Democrats taking control of the House of Representatives, Rachel Sachs, an associate law professor at Washington University in St. Louis, who tracks drug-pricing laws, told Kaiser Health News, “Democrats feel as if they’re really able to experiment.”
It’s difficult to say what, if anything, major will happen, though, particularly with a White House mired in scandals and investigations. Some of the legislative ideas being discussed include:
- Warren’s bid for government control of generic drugs.
- Medicare negotiating drug prices.
- Legislation from Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D-CA) that would require companies to have a U.S. drug price cap no higher than the median of what’s charged in Germany, Japan, France, the UK and Canada.
- Penalize companies that raise drug prices more than 30 percent in five years.
- Allow patients to import drugs from abroad.
- Crack down on so-called “pay-for-delay” practices where branded drugmakers pay off generic companies to delay bringing a competing drug to market.
“Everything is up in the air and anything is possible,” Walid Gellad, co-director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, told Kaiser Health News. “There are things that can happen that maybe weren’t going to happen before.”
Or perhaps not. Drug pricing policy is a political bouncing ball, but while politicians chatter and propose bills, drug prices continue upwards. In 2018, the Pharmaceutical Research and Manufacturers of America (PhRMA) spent a record $27.5 million in lobbying Congress.
And as former Sen. Kaufman notes, “Your guess is as good as mine about what will actually happen. But we can hope, and lowering drug prices would at least be a sign that even now our government can do something positive for all of us.”