Senators threaten to force drug company CEOs to testify on prices

In the first in what was promised would be a series of hearings in the Senate Finance Committee, senators threatened to force drug company CEOs to the table. (Pixabay)

Republicans and Democrats found an issue they could agree on this week: They are particularly unhappy with drugmakers. 

At a Senate Finance Committee hearing on the problem of high prescription drug prices, leaders said the lack of pharmaceutical company leadership in the room wasn't for lack of invites.

"The companies that declined said they would be very happy to have a discussion with us in private, but not in public," said Senate Finance Chairman Chuck Grassley, R-Iowa. "One company said testifying would be a problem because of [a] language barrier. I thought we all spoke English? That is not what I mean when I talk about transparency."

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The ranking Democrat on the committee, Sen. Ron Wyden, D-Kansas, joined Grassley in piling on.

RELATED: 340B overhaul at the top of Congress, Azar's mind

"Even the big tobacco companies were willing to come to Congress to testify. And they make a product that kills people," Wyden said. "They also lied to me, but at least they showed up. The drugmakers are going to have to show up as well."

It was the first in what the senators promised would be a series of hearings, and the senators threatened to force drug company CEOs to the table.

"Even if it means using our powers to compel the drugmakers’ CEOs to show up, they are going to come before this committee," Wyden said. 

Three economists and a big problem

The hearing instead featured the mother of a young man with Type 1 diabetes whose insulin cost $1,700 a month.

It also had three experts on drug pricing who were asked by Grassley to choose what they saw as the single best way to address prices.

Douglas Holtz-Eakin, president of the American Action Forum, a right-leaning economic advocacy group, said his first move would be to tackle policies which he said push drug prices up.

“The first thing that comes to mind is the 340B program which is in need of desperate reform,” Holtz-Eakin said. “It was a well-intentioned program intended to provide drugs at lower costs to needy patients. It’s not well targeted on those patients right now, it’s leading to higher drug costs.”

RELATED: Trump administration proposal would allow Part D plans to negotiate prices of drugs in 'protected' classes

Mark E. Miller, who is the vice president of healthcare for the Laura and John Arnold Foundation—a private foundation run by American hedge fund manager John D. Arnold and his wife Laura—said Medicare Part D should be the target. 

"Restructure the Part D benefit so that you are maximizing the PBM’s incentive to negotiate their prices," Miller said. "Then go outside and for those sets of drugs that are extremely expensive and don’t have competition, consider things like reference pricing or binding arbitration while there are no competitors for those drugs."

The Trump Administration has proposed a rule to allow Medicare Part D plans to negotiate better prices in "protected" classes but it has faced concerns from patient groups it might stymie access to those protected drugs.

Peter B. Bach, M.D., the director of the Memorial Sloan Kettering Center for Health Policy and Outcomes, said Congress should target the pharmaceutical companies launch prices for new drugs.

Wyden himself brought up the price of Gilead's hepatitis C drug Sovaldi.

"According to our bipartisan investigation—and it was based, colleagues, on the company’s own documents—the price was not about recovering research and development costs. It was not based on the previous standard of care," Wyden said. "It was based on the list price of $1000 a pill because they knew they could get away with it and the future would set a pricing platform, a benchmark to be surpassed by successor drugs."

Bach said there were ways to address early pricing.

"The notion of value-based pricing, taking new branded drugs that have no competition and finding their prices based on the benefits they provide to patients is a much better way to align the incentives in the market for innovation than we currently have," Bach said. "The basic notion of markets is we should pay more for things that matter more."

He also said there should be time-certain expiration of monopolies of branded drugs.

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