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Washington Highlights

Senate Panel Investigates Drastic Increases in Off-Patent Drug Prices

December 11, 2015—The Senate Special Committee on Aging Dec. 9 heard testimony from witnesses representing three academic medical centers to learn more about the impact that increases in drug prices are having on patient care. The hearing was the first in what committee chair Susan Collins (R-Maine) described as a “bipartisan investigation into the sudden and dramatic price increases charged by certain pharmaceutical companies for the off-patent prescription drugs they acquired.”

Erin Fox, Pharm.D., director, Drug Information Service, University of Utah Health Care and adjunct professor, University of Utah College of Pharmacy, testified that the prices of two heart drugs had increased from $50 in 2013 to $650 and $2,700 in 2015 when the drugs had been acquired by pharmaceutical companies over that time period. The University of Utah Health Care estimates it would cost $1.6 million more than the previous year just to continue purchasing the same volume of one drug alone, and Dr. Fox noted that “this type of arbitrary and unpredictable inflation is not sustainable in our hospitals, especially when we receive capitated payments for most of our patients.”

David Kimberlin, M.D., professor and vice chair for clinical and translational research and co-director, Division of Pediatric Infectious Diseases, Department of Pediatrics, University of Alabama at Birmingham, described the challenges such drastic increases pose for vulnerable patients. For example, a baby must take medications in liquid form rather than as a pill, so a new compounded alternative to Daraprim is not a viable solution for babies, since the liquid formulation of the compound has not been stability-tested over many years of research like liquefied Daraprim has been. Thus, very young pediatric patients must be treated with Daraprim itself, which may be inaccessible due to the cost.

Witnesses described a variety of policy options to reverse the trend of the price spikes, including greater transparency and other ideas. Gerard Anderson, Ph.D., director, Center for Hospital Finance and Management, and professor, Johns Hopkins Bloomberg School of Public Health, proposed promoting more market competition by establishing an expedited, six-month pathway for approval of generics by the Food and Drug Administration (FDA) when there is a small market for certain off-patent drugs.

Senators Elizabeth Warren (D-Mass.) and Richard Blumenthal (D-Conn.) observed that the rapid increase in drug costs is not limited only to off-patent generics, but also has affected the broader drug market.

Committee Ranking Member Claire McCaskill (D-Mo.) rejected claims she has heard previously from pharmaceutical companies that high prices are not a concern because companies say, “‘Patients don’t pay that, the hospitals pay that,’ as if there was some magic fairy that took care of the costs that land on your bottom line.”

She asked Dr. Kimberlin what providers will do when stocks of Daraprim purchased prior to the price increase are depleted. He responded, “We’ll beg for getting access to these drugs ... [These are] life-saving chemical interventions for these patients, and as treating physicians, we’ll do everything – we’ll fight tooth and nail – to get them for our patients.”

Contact:

Tannaz Rasouli
Sr. Director, Public Policy & Strategic Outreach
Telephone: 202-828-0525
Email: trasouli@aamc.org

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806
Email: jkleinman@aamc.org