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House Committee Examines Bills That Would Make Drug Pricing More Transparent

Today the House Energy and Commerce Committee's Health Subcommittee held a hearing on seven proposals that would require greater transparency for prescription drug prices. During the three hour hearing, Representatives examined seven bills that would require drug companies and pharmacy benefit managers (PBMs) to reveal information about how medicines are priced and why they cost so much. They also heard from several witnesses who offered feedback on the proposed bills. While these proposals are necessary for lowering drug costs, they are not enough on their own. But the fact that the House is so active on this front bodes well for American consumers.

As before, the Subcommittee was chaired by California Representative Anna Eshoo (D-CA-18). The witnesses were:

1) Lisa Joldersma, Senior Vice President, Insurance and State Issues, Pharmaceutical Research and Manufacturers of America (PhRMA)

2) Kristin Bass, Chief Policy and External Affairs Officer, Pharmaceutical Care Management Association (PCMA)

3) Madelaine Feldman, President, Coalition of State Rheumatology Organizations, Alliance of Specialty Medicine

4) Frederick Isasi, Executive Director, Families USA

5) Mark Miller, Executive Vice President of Health Care, Arnold Ventures

And 6) Douglas Holtz-Eakin, President of the American Action Forum.

The bills being considered were:

1) H.R. 2296, which requires drug manufacturers to submit justification to the Department of Health and Human Services (HHS) 30 days before increasing a drug's price above certain thresholds,

2) H.R. 2069, which requires drug companies to submit documents justifying a price increase above a certain threshold to HHS. They would also have to submit total expenditures on research and development, and the expected revenue and profit for the drug,

3) H.R. 2087, which requires all manufacturers to report ASP data to CMS for all drugs covered under Medicare Part B,

4) H.R. 2115, which requires the disclosure of all the aggregate rebates, discounts, and price concessions that PBMs negotiate with drug companies,

5) H.R. 2064, which amends the Social Security Act to require manufacturers of certain drugs, devices, biologicals, and medical supplies to report on product samples provided to certain health care providers, and for other purposes,

6) H.R. 2376, which requires the FTC to investigate competition in the drug supply chain (including PBMs) and provide policy recommendations,

And 7) H.R. 2757, which eliminates copayment requirements for generic drugs for Medicare Part D beneficiaries who receive low-income subsidies.

All the Democratic members of the committee strongly supported the bills, and many Republicans did too, although some said that transparency requirements would burden the companies. The witnesses representing drug companies and PBMs attempted to deflect criticism by announcing they also supported drug pricing transparency. Joldersma said that while PhRMA was worried that the proposed bills requiring advance notice and justification for price increases would lead to problems, they were willing to work with legislators on finding a solution. Bass, representing the PBMs, stated that they would support disclosure of all the rebates and discounts that PBMs negotiate with drug companies.

Dr. Feldman gave testimony about how PBMs were interfering in the doctor-patient relationship and told a powerful story about how PBMs had forced some of her patients-whom she was treating from rheumatoid arthritis-to switch to different, less effective drugs that harmed their health. She also noted that the current rebate system leads to more expensive drugs being placed on PBM formularies and to higher drug prices.

And Mr. Isasi of Families USA told the Committee that one out of every three Americans does not take prescription drugs because they cannot afford them. Despite the fact that America is the wealthiest country in the world, lots of people can't pay for the medicine they need to stay healthy, because drug companies can charge whatever they want. He also mentioned a woman who has to take dozens of expensive pills every day. The cost is so high that she has had to sell her home, move in with her elderly parents, and live an extremely frugal life. Isasi concluded that these transparency bills were badly needed, but more than anything else, the federal government needed to intervene and make drugs affordable.

Several Representatives became visibly frustrated with the drug company and PBM representatives during questioning. Rep. Peter Welch (D-VT) told Joldersma, " PhRMA is claiming it spends all this money on R&D but won’t show us the books! Count me skeptical."

The meeting ended after three hours when the Representatives had to attend a closed briefing. But it underscored how determined Representatives are to pass meaningful action to lower drug costs. And clear and open information about drug pricing is vital for that.

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