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CAPD Statement for the Record: Senate Committee on Finance

The Coalition for Affordable Prescription Drugs (CAPD) appreciates the opportunity to submit the following statement for the record for the Senate Committee on Finance Hearing, “Drug Pricing in America: A Prescription for Change, Part II.”

Overview

CAPD is a diverse group of employers, unions, public sector employees and retirees and the pharmacy benefit managers (PBMs) they partner with to provide more affordable prescription drug coverage for millions of Americans. 

Today, too many patients and families are struggling to pay for the medications they need. It’s no surprise that a recent Politico/Harvard Chan School of Public Health poll showed that 80 percent of Americans see high prescription drug prices as a top priority for the new Congress and the Administration.

The Role of PBMs in Lowering Costs

In the face of rising drug prices, PBMs partner with employers, unions, public sector retirees and other organizations who purchase health care to help manage prescription drug coverage for millions of Americans. By negotiating with drug companies and providing patient-centered tools to improve care and help lower out-of-pocket costs, PBMs save over $900 per person each year.

In addition, PBMs are expanding visibility into drug prices by enabling doctors and patients to see the price of various medicines at the point of prescribing, based on the individual’s specific drug benefits. With this information, physicians switch to a more affordable medicine nearly 20 percent of the time when clinically equivalent alternatives are offered through UnitedHealth Group’s RTBT, PreCheck MyScript. In another example, CVS Health’s Real Time Benefits tool has saved patients an average of $120 to $130 per fill.

Drug Company Prices are the Problem

Although there have been many ideas proffered about how to address the rising prices of medicines, CAPD believes that we first need to address the root problem: prices set by drug makers. Drug companies alone set their prices and they are rising at an unsustainable rate. In fact, drug companies have raised prices already in 2019 on hundreds of medicines. And, what’s worse is that this is repeat behavior. Drug companies often raise those prices multiple times a year for the exact same product. Over the last five years, prices increased on the top 20 most-prescribed brand-name drugs for seniors by an average of 12 percent each year, which is significantly above the annual rate of inflation. The truth is simple: Drug companies hike their prices because they can. When they do so, millions of patients pay more at the counter.

Drug companies, hoping to avoid scrutiny and sustain high profits, are pointing the finger at every other industry except themselves. According to drug companies, the reason why drug prices are so high isn’t because they keep raising prices, or abuse the patent system, or make by far the highest profits in health care – it’s everyone else’s problem, not theirs.

In today’s testimony, we will likely hear a common refrain from drug companies: part of the reason that drug prices are so high are because of the rebates that they are forced to give to PBMs. But the problem with this argument is that, according to a recent study, there is little correlation between prices drug companies set for their drugs and the rebates negotiated by PBMs across 23 major drug categories. What’s more, in Medicare Part D, even after accounting for rebates, the costs of brand name drugs still increased 62% from 2011 to 2015.

All parties need to come to the table to make prescriptions more affordable and accessible to the patients who need them – but nothing will be done if pharma refuses to even pull up a chair and address the problem where it starts: their high prices. We hope Congress will use this hearing as an opportunity to ask the pharmaceutical industry to answer for these increases.

Pharma’s Gamesmanship Reducing Competition to Keep Prices High

One way to meaningfully lower drug prices for patients is to stop the gamesmanship of the patent and regulatory systems that drug companies use to maintain their monopoly pricing power and keep lower-cost generic alternatives from entering the market.

Brand drug manufacturers exploit the FDA Risk Evaluation and Mitigation Strategies (REMS) program to prevent generic drug makers from accessing needed samples, costing the U.S. health care system $5.4B each year. The CREATES Act, which passed out of the Senate Judiciary Committee last year, is a targeted, market-based, bipartisan solution to the longstanding problem of brand name pharmaceutical companies denying generic manufacturers access to the samples they require to conduct necessary equivalence testing to bring their product to market.

Another way brand drug manufacturers game the patent and regulatory system is through “pay-for-delay” deals, in which drug makers engage in anticompetitive patent settlements with potential generic competitors, resulting in $3.5B in higher drug costs each year. In the most high-profile example of these abuses, drug maker AbbVie last year reached agreements with Amgen, Samsung Bioepis and Mylan to delay entry of a lower-cost biosimilar version of the drug to 2023 in the United States.

A third example of gamesmanship by brand drug manufacturers is evergreening, in which generic competition is delayed by additional patents on minor variations of the original drug for the clear purpose of extending monopoly protection. While these tweaks often do not convey enhanced clinical benefits to the patient, they do extend the time period during which drug manufacturers can continue to control pricing by preventing competition. For example, best-selling drug Humira to treat rheumatoid arthritis and psoriasis is protected by over 100 patents and the product may not face any competition until as late as 2034.

We encourage Congress to explore proposals that target patent and regulatory abuses by drug companies in order to lower drug prices for patients.

Conclusion

Simply put, a patient cannot be helped by a drug they cannot afford. We ask today that Congress once and for all refuse to accept drug manufacturers’ excuses for high prices and take steps to put an end to the patent and regulatory abuses that keep prices artificially high.

We believe the time to act is now. CAPD is committed to working with Congress and other stakeholders on this and other solutions to meaningfully lower prescription drug prices for all Americans. We look forward to supporting this critical effort.