On October 17, 2017, the Senate Health, Education, Labor & Pensions (HELP) Committee held its second hearing in a series of three to discuss the cost of prescription drugs, titled “The Cost of Prescription Drugs: How the Drug Delivery System Affects What Patients Pay, Part II.” The hearings stem from a bipartisan request from Senators Al Franken (D-MN) and Bill Cassidy (R-LA), the first of which was held in June of 2017 and the third of which is scheduled for next month. A number of Senators on the HELP Committee, including Senators Franken, Cassidy, Bernie Sanders (I-VT), and Elizabeth Warren (D-MA), have been very vocal about prescription drug pricing and have proposed related legislation for policies such as drug importation.
Five expert witnesses testified, each representing a different stakeholder in the brand and generic prescription drug supply chain:
- Lori Reilly, Pharmaceutical Research and Manufacturers of America
- Chester Davis, Jr., Association for Accessible Medicines
- Elizabeth Gallenagh, Healthcare Distribution Alliance
- Mark Merritt, Pharmaceutical Care Management Association
- Thomas Menighan, BSPharm, MBA, American Pharmacists Association
Chairman Lamar Alexander (R-TN) and Ranking Member Patty Murray (D-WA) opened the discussion by asking participants to focus on issues of pharmaceutical market competition, innovation, and exorbitant consumer costs, rather than partisan topics of insurance coverage.
Price transparency took center stage throughout the discussion. As each expert witness defended their member organizations’ fiscal integrity and efforts to lower costs, Committee members questioned the point in the supply chain at which prices become inflated and considered some of the differences in the process for generic versus single source products. Senator Alexander (R-TN) suggested that transparency is lacking in the role of the Pharmacy Benefit Managers (PBMs), challenging whether rebates are necessary if they add complexity to the process without significantly adding to the consumer experience. Senator Al Franken (D-MN) questioned the transparency of prices set by brand manufacturers, challenging their claim that research and development (R&D) drives prices and pointing to taxpayer funding for basic research conducted by the National Institutes of Health (NIH). Senators Susan Collins (R-ME) and Sheldon Whitehouse (D-RI) discussed transparency in relation to the ability of entities to purchase the rights to drugs, in which they did not invest R&D but are still permitted to raise the price – an unstated reference to Mylan’s acquisition of EpiPens or increases in the prices of Turing’s malaria and HIV medicine, Darapim. Senator Lisa Murkowski (R-AK) called for transparency between the industry and the consumer, claiming that the pricing system is far too complex for patients to understand.
Drug importation from outside of the U.S. was also a recurring theme throughout the hearing, as these drugs lack approval from the Food and Drug Administration (FDA). All five expert witnesses opposed this idea, agreeing with Senator Alexander’s (R-TN) assertion that the FDA produces a gold standard review that protects patients from worrying about the safety of their prescriptions. Senator Elizabeth Warren (D-MA) considered whether importation could be a sound market solution to create competition for brand drugs. Senator Al Franken (D-MN) compared the American system to the European, where governments are allowed to negotiate with pharmaceutical manufacturers to drive costs down. Senator Todd Young (R-IN) proposed that better free trade agreements might protect American intellectual property that allows for the low drug costs in Europe.
Other topics of interest were single source manufacturer monopolies and pharmacists’ ability to assist patients in making informed decisions. Senators Maggie Hassan (D-NH) and Elizabeth Warren (D-MA) raised concern for the manipulation of patent terms and conditions, citing a Harvard study on average years of exclusivity and Allergan’s controversial patent agreement with the Saint Regis Mohawk Tribe. Senator Al Franken (D-MN) highlighted “pay for delay,” a practice where a brand manufacturer pays a generic to delay in bringing the product to market. Senator Tim Kaine (D-VA) echoed Mr. Menighan’s remarks, stating that the most expensive drugs are those that are not taken or that are taken improperly. He discussed, alongside Senator Susan Collins (R-ME), the patient benefits that accompany direction from the pharmacist.
Given the general nature of the hearing’s topic, no specific piece of legislation engulfed the conversation. Instead, senators focused on a broad range of topics that were often important to their constituents or were areas where they had previously expressed interest. The third hearing of the series is slated to occur in November 2017. The full video of the hearing and complete written statements of all five witnesses are available here.