Statement for the Record
Senate Committee on Finance
House Committee on Oversight and Reform
The Coalition for Affordable Prescription Drugs (CAPD) appreciates the opportunity to submit the following statement for the record.
The Senate Finance Committee and the House Committee on Oversight and Reform will be discussing a critical concern of Americans across the country: how to alleviate the burden of high and ever-rising prescription drug prices on seniors, patients, and their families. In fact, 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.
CAPD and our members – a diverse group of employers, unions, public sector employees and retirees who partner with pharmacy benefit managers (PBMs) to provide more affordable prescription drug coverage for millions of Americans – encourage policymakers to address this critical issue and believe that any workable solutions must recognize the root cause of this problem: drug companies setting the high price of their medicines, and often raising those prices multiple times a year for the exact same product.
Drug Company Price Hikes Driving High Drug Prices
Despite the public outcry, drug manufacturers show no signs of reversing this trend. Since January 1st, we have witnessed price hikes on over 250 medications.
These increases include Humira, which remains the world’s top-selling prescription drug. This year’s increase in Humira’s price came on top of another 9.7 percent price increase at the start of 2018. In another example, Allergan raised prices on 50 of its drugs, half of which were increases of at least 9.5 percent. 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.
The truth is simple: Drug companies hike their prices because they can. When they do so, millions of patients pay more at the counter. And they continue to do so year after year.
One way to prevent ever-increasing price hikes 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 US 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. We encourage Congress to pass this bipartisan legislation and explore other proposals that target patent and regulatory abuses by drug companies in order to lower drug prices for patients.
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.
In the face of rising drug prices, pharmacy benefit managers (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, so they can make more informed decisions. Nearly 20 percent of the time, physicians switch to a more affordable medicine when clinically equivalent alternatives are offered through UnitedHealth Group’s RTBT, PreCheck MyScript, and 30 percent of prior authorizations are avoided or initiated electronically. CVS Health’s Real Time Benefits tool has saved patients an average of $120 to $130 per fill.
PBMs are most effective in delivering savings for patients and the employers, unions and public sector retirees they partner with when there is competition in the marketplace. When competition is undermined though regulatory schemes or abuses of the patent system, drug companies maintain their monopoly pricing power and continue to raise prices at will.
Policymakers are considering proposals to address these patent and regulatory abuses and 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.