House, Senate panels begin hearings seeking drug cost solutions
Future hearings will likely focus more on legislative proposals, and at some point members hope that drug companies will share their ideas
Lawmakers emphasized the steep cost of the diabetes treatment insulin and ways to use Medicare and Medicaid to discourage companies from setting high prices as Congress kicked off a series of drug price hearings Tuesday.
Hearings before the Senate Finance and the House Oversight and Reform committees featured academics and patient advocates as lawmakers in both chambers investigate why drug prices are high and what Congress can do about it.
Future hearings will likely focus more on legislative proposals, and at some point members hope that drug companies will share their ideas.
But Senate Finance Chairman Charles E. Grassley, R-Iowa, said that out of “several” companies invited to testify, most declined to speak publicly. Two said yes, but Grassley told reporters they were smaller companies he had never heard of.
Grassley said the committee would try again for another hearing in late February. “I expect to invite them again and this time we will be more insistent of their coming,” he said in the hearing.
Grassley suggested that he would investigate insulin prices, saying he specifically wanted to “get to the bottom” of why insulin prices were so high. In 2015, Grassley and Ron Wyden of Oregon, the Finance Committee’s top Democrat, teamed up on an investigation into the high price of Hepatitis C drugs.
Both hearings Tuesday featured witnesses whose children rationed insulin after they struggled with its costs. Kathy Sego, speaking on behalf of the American Diabetes Association before the Finance Committee, told senators her son Hunter once had to pay $1,700 for a month’s supply. The price of insulin tripled between 2002 and 2013, according to the association.
Antroinette Worsham, testifying before the House Committee on Oversight and Reform, spoke about how her daughter passed away at the age of 22 after the young woman rationed insulin. Worsham’s daughter aged out of a state assistance program when she turned 21, and Worsham said she worried the same fate awaits her 18-year-old daughter, who is also diabetic.
Earlier this month, Oversight Chairman Elijah E. Cummings, D-Md., launched an investigation into 12 drug companies, including insulin makers Eli Lilly and Co., Novo Nordisk and Sanofi, over their pricing tactics.
“Let me be clear. There are powerful interests here that do not want us to interfere with those massive profits,” Cummings said. “But there is bipartisan consensus that we must do something, something meaningful, to rein in out-of-control price increases.”
Experts urged Congress to delve into the reasons behind drugmakers’ pricing and other business decisions to thwart competition.
Avik Roy, a conservative who is president of the Foundation for Research on Equal Opportunity, told House members that Merck and Samsung Bioepsis abandoned their competitor to Sanofi’s insulin product, Lantus, in October 2018 because Sanofi used manufacturer rebates to flood the market.
Roy recommended Congress reduce the costs of drug approvals for manufacturers of biosimilars, which are generic versions designed to mirror brand-name biotech drugs, including vaccines.
He also proposed granting fast-track approval to drugs for diseases with no competition. Roy also said pharmacies should be able to substitute biosimilar drugs for brand-name biologics in the same way they can for generic pills.
Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management, said drug companies should have to justify their price increases, noting that they shield most of their financial data from public view.
“In other countries, the prices of branded drugs tend to go down,” he said. “According to economic theory, research is a fixed or sunk cost and cannot be used to justify subsequent price increases. Once the drug company has spent the money to develop the drug, there are no additional research costs that can justify price increases.”
He also said more scrutiny should be placed on who researched the drug and how it was funded, noting that the research for many drugs comes from academic centers with funding from the National Institutes of Health.
At the Finance Committee, lawmakers heard some common themes from witnesses about how Congress should lower prices, or at least save taxpayers money through savings to Medicare and Medicaid.
Three drug pricing experts from across the political spectrum agreed that the practice of paying physicians a 6 percent markup over a drug’s average sales price in the Medicare Part B outpatient program was incentivizing doctors toward prescribing higher-cost drugs. They said it created a perverse market where both the buyers and the sellers sought higher prices.
The Trump administration is trying to disrupt that model by offering physicians a flat fee in a proposed model that would link the reimbursements to prices paid abroad. The Obama administration also tried to remove the percentage from the physician reimbursement, but faced pushback from Congress and doctors and patient groups who said doctors would leave Medicare.
Peter Bach, who runs the Center for Health Policy and Outcomes at New York’s Memorial Sloan Kettering Cancer Center, said that was unlikely to happen. He said that after a 2 percent cut to Medicare reimbursement because of the sequester in 2013, “none of the concerns that were raised with doctors dropping from the program actually occurred.” He added: “Going to a rational system is very unlikely to impede access.”
Discussions of such a change to Medicare prompted Sen. Patrick J. Toomey, R-Pa., to call it “an idea whose time may have come.”
Any drug pricing legislation will need bipartisan consensus to get through a divided Congress, and lawmakers seem optimistic about their ability to work together. Mark Meadows, R-N.C., conveyed a personal message from President Donald Trump to Cummings that he is serious about working together to lower prices.
“I just want you to convey back to the president that we are willing, ready and able to work with him to get it done,” Cummings told Meadows. Cummings met with Trump in 2017 to discuss letting the government directly negotiate with drug companies under Medicare’s prescription drug benefit, Part D.
While Trump once supported that idea and Democrats still embrace it, the administration has backed away from that.
At the Senate hearing, Republican economist Douglas Holtz-Eakin of the American Action Forum articulated why this idea has faced resistance.
He said that the many Medicare private plans that already negotiate with drug companies in Part D can exert leverage by excluding some drugs from coverage — something the government might be hard pressed to do. “It would be a sea change for the U.S. government to exclude some access to prescription drugs for its seniors,” he said.
And members like Grassley firmly oppose that kind of change. Still, Grassley was optimistic about working with Democrats on drug prices. So far this session, he’s co-sponsored a bill with Wyden to prevent companies from shorting Medicaid on rebates, and bills with Sen. Amy Klobuchar, D-Minn., on the importation of cheaper drugs from Canada and preventing use of patent settlements that delay generic competition.
“It may be a bit harder to get bipartisan work done these days, but I hope we can prove the naysayers wrong,” Grassley said.