Many Questions, Few Answers in Senate Hearing on Opaque US Drug Pricing System

The Senate Health, Education, Labor & Pensions (HELP) committee on Tuesday discussed with representatives of the pharmaceutical supply chain how the drug delivery system affects what patients pay.

Although none of the comments and arguments for reducing the price of pharmaceuticals were new, panelists and senators even seemed to disagree on what exactly is causing prices in the US to be so much higher than the rest of the world.

Mark Merritt, president of the Pharmaceutical Care Management Association (PCMA), pointed his finger at pharmaceutical manufacturers, while industry group PhRMA’s EVP Lori Reilly pointed to hospitals, pharmacy benefit managers (PBMs) and insurance plans.

The hearing, the second in a series (the first was held in June), also included testimony from Association for Accessible Medicines (AAM and formerly the Generic Pharmaceutical Association), the Healthcare Distribution Alliance and the American Pharmacists Association, though most of the questions were directed at PhRMA.

Rebates, Imports and More Negotiation?

Sen. Lamar Alexander (R-TN) questioned the panel on why rebates are necessary and whether they can be removed to simplify the system.

Merritt told Alexander, “We would be OK with that,” and even PhRMA’s Reilly said that would be one option, though she noted that PBMs and health plans would be opposed to such a move.

Alexander also floated the idea of allowing drugs to be imported from other countries with cheaper prices, to increase US competition, though all the witnesses said they oppose the use of imports to lower prices.

Other senators took issue with the complicated drug payment system and supply chain, though suggested changes brought up by both Democrats and Republicans were not well received by the panelists.

Sen. Tammy Baldwin (D-WI) suggested more transparency on pharmaceutical companies and research and development spending, which Reilly said is necessary for the entire supply chain.

Sen. Bill Cassidy (R-LA) singled out price increases for certain medicines, such as insulins, that occur near the end of a company’s monopoly, though Reilly countered that the increases are meant to help boost companies’ bottom lines so they can invest in developing the next generation of medicines.

Sen. Elizabeth Warren (D-MA) brought up the fact that pharmaceutical companies’ monopolies on certain drugs can decrease access because the prices are so high and she questioned Reilly on whether the US government should be allowed to further negotiate drug prices (as President Donald Trump has suggested).

But Reilly said that any further government negotiation would be considered “price controls,” and although every other country in the world uses price controls, Reilly said other countries lack the access to innovative medicines that Americans enjoy.

Sen. Al Franken (D-MN) questioned the panelists on why Americans pay more than nearly any other country for medicines and Reilly said that making other countries pay more might lower costs in the US, though it’s unclear how that would work.

The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay