The former chairman of the House Committee on Oversight and Reform, Rep. Elijah Cummings, didn’t live to see the day when drug prices would fall significantly in the United States.
But his work in launching an investigation into the industry's pricing practices has already shed a harsh spotlight on the routine price hikes and anticompetitive tactics that companies use to boost their top-lines.
On Thursday, the committee—now led by Rep. Carolyn Maloney (D-N.Y.)—will hold a hearing to examine the findings of the investigation that kicked off in January 2019, nine months before Cummings' death.
As part of the hearing, the committee will present its view on the structural reforms needed to lower drug prices. In addition, lawmakers will analyze how President Joe Biden’s Build Back Better Act will address the issue by allowing Medicare some ability to negotiate prices, preventing prices from rising faster than inflation and placing a cap on out-of-pocket costs for Medicare patients.
Among those scheduled to speak are Mindy Salango, a patient advocate with type 1 diabetes. She will address the co-pay caps for insulin that have been proposed in the Build Back Better Act. Other speakers include Reshma Ramachandran, M.D., the co-chair of the Doctors for America Drug Affordability Action Team; Rena Conti, PhD, professor, Department of Markets, Public Policy and Law, at Boston University; and David Mitchell, the president of Patients for Affordable Drugs.
For years, the pharma industry’s defense of price hikes has centered on high R&D costs, risky investments and rebates to middlemen. But in prior hearings over the last 15 months, the committee has shown that some price hikes have been driven by the profit motive.
In September 2020, for example, when the committee presented its findings on an investigation of Celgene’s pricing of Revlimid, it found that hikes were enacted to meet aggressive sales targets.
Since its launch in 2005, the price of a single Revlimid pill has risen from $215 to its present $832. A deposition from 2015 revealed that executives at Celgene—which has since been acquired by Bristol Myers Squibb—were free to raise (PDF) the price of the multiple myeloma drug “any time they wanted.”
In October 2020, the committee presented similar evidence on the pricing strategies of Novartis, Amgen and Mallinckrodt. For example, in their pricing of H.P. Acthar Gel, Mallinckrodt execs went (PDF) “as high as possible” to meet financial goals, the committee wrote in a report.
The committee’s scrutiny also came upon AbbVie for its management of blockbusters Humira and Imbruvica. The probe showed that the company raised prices and exploited the U.S. patent system. Investigators were able to conduct their activities only after lawmakers threatened AbbVie with a subpoena eight months earlier.
“The facts show that AbbVie raised prices on Americans for one simple reason: greed,” Maloney said in a hearing in May.
Within the last several weeks, Democrats have reportedly agreed to a framework for a drug pricing deal that will allow the government some ability to negotiate prices for drugs covered under Medicare Part B and Part D. But analysts at Evercore ISI termed the new structure “negotiation in name only,” as it will cover only the 10 most costly Medicare drugs in 2025, with progressively more meds added over future years.