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Senate Committee Takes First Step on Rising Pharmaceutical Prices

Posted 13 June 2017 | By Zachary Brennan 

Senate Committee Takes First Step on Rising Pharmaceutical Prices

The US Senate Health, Education, Labor and Pensions Committee held the first of three hearings on rising pharmaceutical prices Tuesday, discussing the confusing system by which prices are set and possible ways to bring them down.

Sen. Lamar Alexander (R-TN) opened the hearing by highlighting the extent to which biopharmaceutical companies pay for the development of new medicines, and to note there will be two more hearings focused on R&D and supply chain expenses, as well as one next fall on a report from the National Academy of Sciences on ensuring patient access to affordable drugs.

Sen. Patty Murray (D-WA), like other Democrats on the committee, focused most of her comments on the lack of transparency around the Republicans’ creation of an Obamacare replacement bill, though she also said that President Donald Trump is "wrong to point his finger at FDA," as he previously called to significantly reduce FDA regulations to lower costs.

Panelists at the hearing, which included experts from Avalere Health, the Manhattan Institute, Johns Hopkins and Pew Charitable Trusts, explained some of the intricacies of the drug pricing system to the senators, with nearly all agreeing high prices are making medicines unaffordable for patients in many cases, and out-of-pocket expenses are rising.

Sen. Sheldon Whitehouse (D-RI) pointed out that economists can look at some brand name drug prices and see monopolistic behavior, though no one can step in and help.

Pew’s Allan Coukell said that particularly for biologics and specialty drugs, prices have been steep and can get worse with annual increases, while others said there needs to be a shift toward a more value-based rather than volume-based system.

Criticism of the high prices was not just limited to the Democrats either. Sen. Bill Cassidy (R-LA) said that the social contract with pharmaceutical companies to reward innovation has "fallen apart." He also discussed ways in which rebates can often drive up the out-of-pocket expenses for patients, as a recent JAMA article discussed.

And though Prof. Gerard Anderson of Johns Hopkins noted the complexity surrounding drug pricing and the refrain from industry that list prices are not what patients pay, he said that the problem often begins with the setting of the list price.

"As any economist can tell you, when there’s a monopoly, they set the price that the market will bear," Anderson said, noting that most companies spend more on sales and marketing than R&D.

In addition to the Senate hearings, HHS Secretary Tom Price has also been crafting a plan to bring down the cost of pharmaceuticals, though details of that plan have yet to be disclosed. FDA Commissioner Scott Gottlieb has also vowed to speed the approval of more generic drugs to increase competition and lower prices, something all of the panelists at Tuesday's hearing agreed works well when there are enough competitors.

Categories: Regulatory News

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