House Drug Price Hearing Takes Aim at Industry

Companies are "raising prices without justification," says committee chairman

  • by Contributing Writer

WASHINGTON -- Pharmaceutical companies were pummeled during Tuesday's hearing of the House Committee on Oversight and Reform. The panel's first hearing of the 116th Congress examined the reasons for rising drug prices and follows committee chairman Elijah Cummings' (D-Md.) launch of an aggressive investigation into pharmaceutical pricing issues.

"For the past decade I've been trying to investigate the actions of drug companies for all sorts of drugs -- old and new, generic and brand name," Cummings said as the session began. "We have seen time after time drug companies make money hand over fist by raising the prices of their drugs often without justification and sometimes overnight while patients are left holding the bills."

Midway through the hearing, Rep. Mark Meadows (R-N.C.), chairman of the conservative House Freedom Caucus, said he had a message for Cummings from President Donald Trump.

"He wanted me to make sure that you knew that on this particular subject, not only is he serious, he's serious about working in a bipartisan way to lower prescription drug prices," said Meadows. "When I spoke to him last night, he wanted to make sure I conveyed that to you."

Cummings welcomed the offer. "We are willing, able, and ready to work with him to get it done."

But ranking member Jim Jordan (R-Ohio) criticized Cummings' drug pricing investigation because Republicans were not consulted and called it "an effort to score political points."

The investigation began when Cummings sent letters to 12 drug manufacturers on Jan. 14 asking them to provide information about their price increases, spending on research and development, and efforts to protect market share and pricing power.

"Democrats were eager to blame the private sector when I think the answer is far more complicated," Jordan said. "The problem is not that the free market has failed us but the government interventions in the market have distorted incentives, created barriers to competition, and left things in a mess."

The committee members heard first from Antroinette Worsham of Cincinnati, Ohio. Her 22-year-old daughter, Antavia, had type 1 diabetes and died because she couldn't afford the high cost of her insulin. Antavia received health insurance through the Ohio Department of Health's Bureau for Children of Medical Handicaps, which ends when young adults turn 21. Without health insurance, her daughter began rationing her insulin.

Worsham's younger daughter, Antanique, also has type 1 diabetes and the same state-provided insurance. Worsham said she is frightened by the prospect of what will happen when that daughter loses her health insurance.

"I am crying out and asking for you to review the pharmaceutical drug gouging and make healthcare affordable for all," she told the panel.

"We understand the anger about rising insulin costs," Ashleigh Koss, a spokeswoman for Sanofi, one of three companies that make insulin, said in an email after the hearing. "We recognize that more needs to be done to improve access and affordability for people, and that is why we are committed to both doing our part ... and working with all the stakeholders in the health care system to improve access and affordability."

Eli Lilly, another insulin manufacturer, "is committed to ensuring everyone living with diabetes has reasonable access to insulin," spokesman Gregory Kueterman, said in an email following the hearing. "We recognize the importance of this topic and we look forward to working toward longer-term solutions."

Drug companies were not invited to present testimony at this hearing but are expected to appear at one in the future.

AARP's national volunteer president, Catherine Alicia Georges, RN, told the committee that seniors with Medicare drug coverage are struggling to afford their medications. She described a Florida AARP member who stopped taking her cancer therapy because she "lives on a fixed income and simply cannot afford to drain her retirement savings to pay for a medication."

A recent AARP study of the top most widely used brand-name prescription drugs found that their retail prices increased by an average of 8.4% in 2017, or four times the rate of inflation, she said.

Aaron Kesselheim, MD, JD, MPH, director of Harvard Medical School's program on regulation, therapeutics, and law, told the panel that one of the main reasons for high drug prices is government patent protection intended to promote innovation that allows "manufacturers to charge any price they want, or whatever the market will bear."

Gerard Anderson, PhD, director of the Johns Hopkins Center for Hospital Finance and Management, told the committee to investigate how manufacturers justify increases in brand-name drugs when in other countries these prices tend to go down over time. "Research is a fixed cost and cannot be used to justify subsequent price increases," he said. Yet drug companies justify their high prices based on the amount of clinical research they do and "the problem is we just don't know why it costs companies so much to conduct clinical research."

And Avik Roy, MD, president of the Foundation for Research on Equal Opportunity, took aim at two "excuses" he said drug companies use to explain high prices. They blame increases on the rebates they give pharmaceutical benefits managers, who administer drug insurance plans. Roy countered, "in the absence of competition, manufacturers often charge the highest prices they can." He argued that PBMs help drug companies facilitate the use of more expensive drugs by, among other things, assigning low patient co-payments to more expensive drugs, with insurers and government payers footing most of the cost.

He also criticized research and development costs as a driver of rising drug costs. If electronics manufacturers wanted to charge thousands of dollars for a 20-year-old television in order to pay for R&D, "you'd laugh them out of the room."


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