Regulatory Focus™ > News Articles > New House, Senate Bills Would Require Companies to Justify Drug Price Hikes of More Than 10%

New House, Senate Bills Would Require Companies to Justify Drug Price Hikes of More Than 10%

Posted 15 September 2016 | By Zachary Brennan 

New House, Senate Bills Would Require Companies to Justify Drug Price Hikes of More Than 10%

US Sens. Tammy Baldwin (D-WI) and John McCain (R-AZ), as well as Rep. Jan Schakowsky (D-IL), on Thursday introduced new bills that would require drug manufacturers to disclose and provide more information about planned drug price increases, including research and development costs.

More specifically, the FAIR Drug Pricing Act would require drug manufacturers to notify the US Department of Health and Human Services (HHS) and submit a transparency and justification report 30 days before they increase the price of certain drugs by more than 10%.

HHS will make the information from these reports—excluding any proprietary and confidential information— publicly available within 30 days in an understandable online format. HHS will be required to submit an annual report to Congress summarizing the information and reports submitted by drugmakers under this bill.

If passed, nearly the entire pharmaceutical industry would be subject to these reports, which would require manufacturers to provide a justification for each price increase, manufacturing, research and development costs, net profits attributable to the qualifying drug, marketing and advertising spending on the drug and other information as deemed appropriate.

The bill will not prohibit manufacturers from increasing prices, but it will highlight more of the problems and bad actors arbitrarily jacking up the prices of prescription drugs.

In a fact sheet on the bill (the text of the legislation has not been released yet), the senators and Schakowsky say that prices have more than doubled for four of the top 10 selling drugs over the past five years. A recent GAO report also found that even for hundreds of generic drugs, prices have been skyrocketing since 2010.

Schakowsky said in a statement: “The FAIR Drug Pricing Act will provide those answers.  Prescription drug corporations should not be allowed to hide behind a curtain, refusing to disclose information on drug prices and price gouging with impunity. Congress has sat by while Mylan increased the cost of life-saving EpiPens from $100 to over $600, while Gleevec, a cancer drug that came on the market at $30,000 now costs more than $100,000. The average cost of insulin has gone up 231%.  Now is the time for action. That is why I am proud to stand with Senator Tammy Baldwin, Senator John McCain, and the AARP introducing this long overdue legislation to expose the profiteering of drug corporations.”

The bills are also supported by the Medicare Rights Center, Consumers Union, Doctors for America: Drug Price, Value, and Affordability Campaign, Families USA and the Center for Medicare Advocacy, Inc. and Public Citizen.

Similar bills introduced at the state level, including one in California, have been pulled or failed to pass after pressure from drugmakers and lobbying groups.

PhRMA spokeswoman Holly Campbell told Focus: "The FAIR Drug Pricing Act will not provide information patients can use. Instead it focuses on isolating research and development costs for the few medicines that make it to patients in a thinly veiled attempt to build a case for government price setting." 

Bill Text


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