House Dems fire first salvo in drug pricing fight

House Democrats this week fired a shot across the bow of the nation’s pharmaceutical companies as they begin a long-anticipated effort to cut down on high drug prices.

The House Oversight and Reform Committee launched a sweeping investigation into how the industry sets its prices, in what is being seen as one of the broadest drug pricing investigations in decades.

{mosads}Rising drug prices have been a central concern for Oversight and Reform Committee Chairman Elijah Cummings (D-Md.), who has also vowed to bring pharmaceutical industry executives to testify in front of the committee.

“For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits,” Cummings said in a statement.

Cummings sent letters to a dozen different companies seeking detailed
information and documents about how the companies price their medications.

Democrats have long vowed to target higher drug prices, but the letters sent the clearest signal yet about where the committee intends to move in its investigation.

The scope of Cummings’s probe is broad. In his sights are some of the largest branded drug companies, as well as the three primary insulin manufacturers in the world.

“He’s trying to pick the world’s biggest [companies] for his battles,” one source said.  

The chairman requested information on research and development investments, as well as price increases from companies that the committee identified as selling the drugs that are the most expensive for Medicare Part D, the costliest per Medicare beneficiary, and the drugs that have seen the largest price increases over the past five years.

“The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices,” Cummings said in his letters.

Prescription drug companies know the letters are just the first step as Democrats use the power of their new House majority to tackle rising drug prices.

{mosads}“It was not unexpected,” one industry lobbyist said of Cummings’s action. “He’s casting a wide net. It was more when, rather than if.”

Separately, Cummings is also holding a hearing at the end of the month that will serve to launch a “broad review of the skyrocketing prices of prescription drugs.”

Witnesses have not been announced, but they are expected to be industry experts and analysts, rather than company executives.

Drug companies have been under increasing pressure over the cost of their medications.

President Trump has lashed out against price hikes on Twitter and in speeches. Last year, he persuaded some manufacturers to pause their annual price increases. But most of the price hike freezes were temporary, and many manufacturers have gone back to business as usual.

Drug prices have spiked over the last decade, putting a pinch on consumers who have not seen wages keep pace with the increases. Democratic lawmakers say Republicans were too easy on the industry when they controlled the House and have vowed that will change now that they are in charge.

Cummings met with Health and Human Services Secretary Alex Azar on Tuesday, and the two talked about finding common ground in reining in drug prices.

“We are headed for the same goals, but not necessarily the exact same legislation, so I’ve got to tell you I came out of the meeting feeling hopeful that this is something that we can do on a bipartisan basis,” Cummings told reporters.

Republicans are keeping their powder dry and so far have not commented on Cummings’s investigation.

High prices are a bipartisan concern, but the parties are divided on how best to
address the issue.

Democrats want to allow Medicare to negotiate prices and let Americans buy cheaper prescription drugs from abroad, policies that are staunchly opposed by pharmaceutical companies.

Cummings has been at odds with the drug industry for years. In his time as ranking Democrat on the Oversight and Reform Committee, he has sponsored or co-sponsored dozens of bills targeting drug companies, including a comprehensive pricing reform and transparency package in 2017.

One lobbyist described that legislation as “every anti-pharma bill rolled into one.” Many expect it to be the model as the committee moves forward.

That bill did not advance, but with Democrats in control of the House, the committee’s pricing investigation is likely to result in more evidence that similar policies are needed.

Prescription drug companies have defended their practices by noting the high cost of new product development. They also point to the system as a whole, especially the role played by insurers and pharmacy benefit managers. The industry also sees a long fight ahead with high stakes.

The industry’s main lobbying group, Pharmaceutical Research and Manufacturers of America, is expected to give executives suggested talking points, a lobbyist said.

Beyond that, every company is on its own, especially when executives are called in to testify, the lobbyist added.