United States Senators Susan Collins and Claire McCaskill, the Chairwoman and Ranking Member of the Senate Aging Committee, released a report on drug pricing titled, “Sudden Price Spikes in Off-Patent Prescription Drugs: The Monopoly Business Model that Harms Patients, Taxpayers, and the U.S. Health Care System.”
The report details the findings stemming from the Committee’s bipartisan investigation into abrupt and dramatic price increases for prescription drugs whose patents expired long ago. Via a close examination of the monopoly business model used by four pharmaceutical companies to exploit market failures, the report examines how companies acquired decades-old, off-patent, and previously affordable drugs and then raised the prices suddenly and astronomically at the expense of patients. The report also: provides case studies of the four companies; explores the influence of investors; assesses the impacts of price hikes on patients, payers, providers, hospitals, and the government; and discusses potential policy responses.
During the course of its bipartisan investigation, the Aging Committee held three hearings; interviewed scores of patients, doctors, hospital administrators, consumer advocates, health experts, and pharmaceutical industry executives and board members; reviewed more than one million pages of documents obtained from the four companies; and deposed or took transcribed interviews of numerous corporate witnesses.
The first hearing of the series, held on December 9, 2015, sought to identify and define the problems resulting from these price increases. The second hearing, held on March 17, 2016, took an in-depth look inside the monopoly business models of Turing and Retrophin, formerly headed by Martin Shkreli. The third hearing, held on April 27, 2016, investigated Valeant’s business model, its investor relationships, and the harm caused to patients and the health care system by the enormous price increases Valeant imposed on certain drugs it acquired.
The senators took into account the views of a variety of health policy experts and clinicians in identifying several potential policy responses, including:
- Enact the Increasing Competition in Pharmaceuticals Act, introduced by Chairman Collins and Ranking Member McCaskill, to incentivize competition to address regulatory uncertainty, small market size, and other factors that serve as limitations to generic entry;
- Encourage generic competition by ensuring the right to obtain samples and simplifying Risk Evaluation and Mitigation Strategies;
- Consider allowing highly targeted, temporary prescription drug importation to provide prompt price relief for major price increases in off-patent drugs;
- Take steps to prevent the misuse of patient assistance programs and copay coupons;
- Reinvigorate the Federal Trade Commission to take greater enforcement action on drug company mergers, operations, and drug market dynamics; and
- Improve transparency in the health care system.
“The skyrocketing prices of prescription drugs affect every American family, particularly our seniors,” said Chairwoman Collins. “This report is the culmination of the Senate Aging Committee’s year-long, bipartisan investigation into the egregious price increases on a number of decades-old drugs acquired by pharmaceutical companies that act more like hedge funds. We must work to stop the bad actors who are driving up the prices of drugs that they did nothing to develop at the expense of patients just because, as one executive essentially said, “because I can.”
“The hedge fund model of drug pricing is predatory, and immoral for the patients and taxpayers who ultimately foot the bill—especially for generic drugs that can be made for pennies per dose,” Ranking Member McCaskill said. “We’ve got to find ways to increase competition for medicines and ensure that patients and their families aren’t being gouged.”