January 17, 2019

Congress Moves Toward Examining Pharmaceutical Pricing Practices

Last Monday, Representative Elijah Cummings (D-MD) launched one of the most wide-ranging investigations in decades into the prescription drug industry’s pricing practices. As the new Chair of the House Committee on Oversight and Reform, Cummings said in a statement, ““For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits. The goals of this investigation”, he added, “are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices.” The Committee’s first hearing on the subject is scheduled for January 29.

On January 10, Rep. Cummings – together with Senator Bernie Sanders (I-VT) and Rep. Ro Khanna (D-CA) — introduced three bills that, according to CNBC, pave the way to lower prices for drugs under Medicare Part D and “allow Americans to import lower priced drugs from abroad and peg the price of prescription drugs in the U.S. to the median price in five major countries — Canada, the United Kingdom, France, Germany and Japan.”

The three prime sponsors were joined by over 24 of their colleagues from both chambers in endorsing a legislative package which includes:

  • the Prescription Drug Price Relief Act
  • the Medicare Drug Price Negotiation Act, and the
  • the Affordable and Safe Prescription Drug Importation Act

As incoming Chair of the Senate Finance Committee, Chuck Grassley (R-IA) also weighed in on the subject, announcing that his main goal in this new position would be reducing prescription drug costs. On January 9, Grassley and Sen. Amy Klobuchar of Minnesota had introduced the Safe and Affordable Drugs from Canada Act of 2019, which would permit the importation of prescription drugs from approved pharmacies in Canada.

According to the Charlotte Observer, pharmaceutical industry representatives have countered, asserting that these bills would be destructive to the U.S. health care system, if passed, since “government price regulation could limit access to some medicines, undermine financial incentives for research, and compromise safety standards.”

The Centers for Medicare and Medicaid Services (CMS) reports that domestic spending on prescriptions has “increased 0.4 percent in 2017 to $333.4 billion.” According the Kaiser Family Foundation’s Health System Tracker survey “About one in four people taking prescription drugs report difficulty affording their medication… 52% of respondents said that passing legislation to bring down the price of prescription drugs should be the government’s top priority.”

None of the above bills address the issue of the six Protected Classes of drugs provided by Medicare, as this provision is controlled by the CMS and not by the legislature.

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