Senate Aging Committee Hearing: Rising Drug Prices

Today (Wednesday March 17, 2010), at 2:30 p.m., the Senate Special Committee on Aging will be holding a hearing in the Senate Dirksen Building, room 562. The title of the hearing is: "Seniors Feeling the Squeeze: Rising Drug Prices and the Part D Program." Committee Member Senator Bill Nelson (D-FL) will be chairing the hearing.

To view the hearing on line click here to see the webcast.

The hearing stems from six letters that were sent to the following pharmaceutical companies (click each to read the letter): AstraZeneca, Pfizer, Lilly, GlaxoSmithKline, Novartis and Sanofi-Aventis. The letters were sent because the Committee wants to know why there are “large discrepancies” between the prices charged for medicine in the US and other industrialized countries. For example, the letters state that Americans spend an average of $878 a person on drugs per year, compared with $446 a person in other industrialized countries, and then cite specific examples of differences in price, such as drugs costing up to four times more in the US.

The letters note that AstraZeneca’s Nexium costs $3.91 in the US compared with $1.32 in the UK and 88 cents in Germany. Pfizer’s Lipitor costs $2.82 in the US versus 71 cents in New Zealand. The committee cites IMS Health to make the comparisons.

Interestingly, although Senator Kohl (D-WI) believes there are “large discrepancies,” he also acknowledges that “drug quality should not be sacrificed for cost.” Despite his belief, his letters assert that “the difference in prices can’t be explained by differences in production or manufacturing.” As a result he asks each company to:

• Explain the discrepancies in prices;    
• Detail the cost increases for the drugs mentioned in the letters over the last ten years in each country;  
• Explain why drug prices in countries such as Ireland and the Philippines are being reduced, while the same drug costs in the U.S. continue to climb;    
• Explain why U.S. drug prices are not competitive when compared to prices in other industrialized countries;  
• Describe how much and what percentage of the research budge is comprised of U.S. federal funds;
• Detail what their profit margins and distribution costs in each of the countries listed is, and what percentage of overall profit for the drug(s) listed are from the U.S.;       
• Tell the number of employees in every country and what the percentage of operation in the U.S. is;    
• List how much money was spent on marketing each of these drug(s) in each country, and how much was spent directly on marketing to physicians; and  
• Tell whether the company manufactures free samples of the mentioned drug(s) in each country, and if so, how much money was spent making and distributing such samples.

Although the hearing is being held today, Senator Kohl asked that the companies respond by April 5, 2010. We will have a write up and summary of the hearing later.