aamc.org does not support this web browser.
  • Washington Highlights

    Senate, House Hold Hearings on Drug Prices and IP, Drug Supply Chain

    Christa Wagner, Manager, Government Relations
    Ally Perleoni, Director, Government Relations

    The Senate and House the week of May 6 held hearings to examine different aspects of prescription drug prices. The Senate Judiciary Committee May 7 investigated the role of intellectual property (IP) protections, while the House Energy and Commerce Subcommittee on Health May 9 investigated the drug supply chain.

    In the May 7 Senate hearing “Intellectual Property and the Price of Prescription Drugs: Balancing Innovation and Competition,” committee Chair Lindsay Graham (R-S.C.) used his opening statement to frame the hearing by asking, “How do you make sure America continues to be the most innovate place on the planet for prescription drug development to make sure Americans live long and healthy lives?” How much of rising drug prices are because of IP extensions? What is the right balance of protecting IP and promoting competition?

    Witnesses from the South Carolina Department of Health and Human Services, the advocacy organization Patients for Affordable Drugs, and two witnesses with expertise in patent law all testified that increased competition in the marketplace is an effective method to decrease high drug prices and that drug makers are monopolizing the marketplace. A representative from the Pharmaceutical Research and Manufacturers of America testified that patent protections are “the lifeblood of innovation” and that protecting IP after drug development allows drug manufacturers to support investments on the front end of the development pipeline.

    Several members of the panel and lawmakers on both sides of the aisle shared their support for the Creating and Restoring Equal Access to Equivalent Samples Act of 2019 (CREATES Act, H.R. 965/S.340), which supporters described as a simple solution to increase competition in the marketplace. The House Judiciary Committee April 30 approved the CREATES Act [see Washington Highlights, May 3]. Chairman Graham noted in a press statement following the hearing, “There seems to be a lot of common ground that would address the problem of companies gaming the system. I expect the committee to act in a bipartisan fashion this year to move the ball forward in terms of lowering prescription drug prices, while safeguarding innovation.” 

    A May 8 Energy and Commerce Health Subcommittee hearing titled, “Lowering Prescription Drug Prices: Deconstructing the Supply Chain,” highlighted an ongoing debate between pharmacy benefit managers (PBMs) and the pharmaceutical industry, both of whom state that the other is to blame for high drug costs.

    The first panel featured witnesses from pharmaceutical companies Pfizer, Amgen, and Exelixis, and PBMs Express Scripts and Navitus Health Solutions. In the second panel, lawmakers heard from Walgreens, Blue Cross Blue Shield of North Carolina, Ascension health care system, the American Medical Association, and the AARP.

    In his opening remarks, Full Committee Chairman Frank Pallone (D-N.J.) noted the dramatic increase of drug prices, and inquired as to “how pharmacy benefit managers work with health insurance plans to decide how to cover these medications and under what conditions.” He continued that, “I am most interested in how these decisions impact consumers — our constituents — and what they pay when they reach the pharmacy counter or receive a bill for drugs administered in a hospital.”

    In her opening statement, Amy Bricker, senior vice president for supply chain at Express Scripts, stated that “the problem starts with list prices, not rebates … but we owe it to our fellow Americans to find solutions.”

    Justin McCarthy, senior vice president of the patient and impact group at Pfizer, in his testimony countered the notion that list prices are the problem, and also stated that contrary to what some analysis has said, the rebate rule is not a windfall to Pfizer or the pharmaceutical industry. He defended the practice of rebates, stating that without them, PBMs will have the ability to negotiate greater discounts, which will not necessarily get passed on to patients.

    During the second panel, Rep. Larry Bucshon (R-Ind.) asked Lynn Eschenbacher, chief pharmacy officer of Ascension health care system, several questions about 340B hospitals, inquiring as to whether the 340B discounts are passed on to the patient at the pharmacy counter. 

    Eschenbacher stated, “when we get the funds back it doesn’t happen at the counter it happens when they come back to Ascension and all the programs we provide across Ascension. We do medical missions at home, we do nurses in school districts, we do free medical care, the comprehensive care of the program we use those monies.” Eschenbacher also emphasized that sometimes the patient cannot even pay the 340B price of the medication, so “we also help to pay for the products for those patients.”

    Subcommittee Chairwoman Anna Eshoo (D-Calif.) closed the hearing by stating that, “we have a lot of things to fix. And there really is an urgency to it. What gives me … inspiration here is that there is bipartisan agreement on this … because we agree that this task has to be addressed and this challenge needs to be met for the American people.”

    The House of Representatives also May 8 passed the first drug pricing bills of the 116th Congress, the Purple Book Continuity Act of 2019 (H.R. 1520) and the Orange Book Transparency Act of 2019 (H.R. 1503) [see Washington Highlights, April 5]. Following passage, the Campaign for Sustainable Rx Pricing, of which the AAMC is a member, applauded the House of Representatives for “taking this first step” on lowering drug prices and added, “Now the hard work begins to … [advance] critical, market-based solutions that will boost competition, increase transparency and lower prices.”