At Hearing, Warren Calls out Big Pharma for Price-Gouging
“Big drug manufacturers have outsized market power and face little, if any, competition for their brand name drugs – so they are free to increase prices as much as they want.”
Earlier today, Senator Warren and her colleagues slammed PhRMA’s evasive and misleading information about high drug prices and pressed them to answer for their members’ shady behavior
Washington, D.C. – At today’s Senate Finance Committee hearing, United States Senator Elizabeth Warren (D-Mass.) called out drug manufacturers for price-gouging Americans on prescription drugs. As Americans deal with high prices across the economy, Senator Warren is pushing for reforms that will lower drug prices and stop Big Pharma from taking advantage of consumers.
Earlier this month, Senators Warren and Amy Klobuchar (D-Minn.) and Representatives Katie Porter (D-Calif.) and Jan Schakowsky (D-Ill.) led a letter to PhRMA about two studies that revealed troubling increases in drug prices. The studies showed that, in January alone, manufacturers raised prices for 16 of the 20 top-selling Medicare Part D drugs and increased prices for brand name drugs by an average of over 5%. Earlier today, Senators Warren and Klobuchar and Representatives Porter and Schakowsky released PhRMA’s misleading and evasive response and further called out drug manufacturers for providing evasive and misleading information on high drug prices.
In their letter, PhRMA claimed that average prices are declining, stated that price increases weren’t hurting consumers at the pharmacy counter, and blamed middlemen like pharmacy benefit managers, pharmacies, and insurance companies for higher prices instead of owning up to drug manufacturers’ role in pricing decisions. But during questioning, key witnesses confirmed to Senator Warren that these claims made by PhRMA are “fiction.” Another witness explained that patients are going off of their drugs or skipping doses due to the high prices, and some have been forced to choose between buying groceries or paying for their prescription.
Senator Warren is pushing Congress to pass legislation that would allow Medicare to negotiate lower prices and cut costs for beneficiaries. She also called on the Biden administration to use its existing authorities, such as compulsory licensing and march-in rights, to rein in drug prices immediately.
Senator Warren is fighting to make sure the government uses every tool to lower drug prices and crack down on corporate profiteering to bring down consumer costs.
- In February 2022, Senators Warren, Angus King (I-Maine), and Congressman Lloyd Doggett (D-Texas) urged HHS to exercise march-in rights for life-saving cancer drug Xtandi to dramatically lower its price for millions of Americans. She also called out big pharma and insurance companies’ tricks to squeeze taxpayers and Medicare beneficiaries. And she called for passage of the Build Back Better Act, which includes provisions that could generate billions in savings and give the Department of Health and Human Services the authority to negotiate prices on some high-price drugs.
- In June 2021, Senator Warren led a letter questioning PhRMA's lobbying efforts to block policies that would lower drug costs for millions of Americans.
- At a Senate Finance Committee hearing in May 2021, Senator Warren called for trade negotiations that put patients over big pharma profits.
- Senator Warren has also introduced legislation that would radically reduce drug prices through public manufacturing of prescription drugs, including the Affordable Drug Manufacturing Act with Congresswoman Schakowsky. With Senator Shaheen, she introduced the End Taxpayer Subsidies for Drug Ads Act, legislation that would close a big pharma advertising loophole.
Transcript: Prescription Drug Price Inflation: An
Urgent Need to Lower Drug Prices in Medicare
U.S. Senate Finance Committee
Wednesday, March 16, 2022
Senator Elizabeth Warren: Earlier this month, you and several others on this Committee joined me in sending a letter to PhRMA about two studies that revealed troubling increases in drug prices.
The studies showed that, in January alone – one month – manufacturers raised prices for 16 of the 20 top-selling Medicare Part D drugs and increased prices for brand name drugs by an average of over 5%.
Now, in their response to our letter, PhRMA revealed that there is no rationale – other than industry price-gouging – for raising prices. And I’d like to share some of what we’ve learned in evaluating PhRMA’s weak attempts to justify these price increases.
First, PhRMA claimed that drug manufacturers weren’t increasing prices at all – that backdoor rebates and discounts have caused the average prices of medicines to actually decline.
But they pretty carefully cherry-picked the data on this. In fact, according to the Congressional Budget Office, “Brand-name drugs… have experienced substantial growth in average prices.”
Dr. Conti, what do you think about PhRMA’s claim that prices are secretly declining?
Dr. Rena M. Conti, Ph.D.: Thank you. It's fiction. Pharma sets the prices of their products, and we are seeing over and over again that the prices of particularly specialty drugs have increased both overall but also for specific consumers at the pharmacy counter.
Senator Warren: Thank you, Dr. Conti. You know, I think the- the data are clear on this. Brand name drug prices are rising, not falling. And it is absurd to claim otherwise.
So let's go to their second argument. Next, PhRMA claimed that their price increases weren’t really hurting consumers at the pharmacy counter.
Ms. Stern, you represent patients who are forced to pay high drug prices. What do you make of PhRMA’s argument that increases in list prices don’t actually hurt consumers?
Steffany Stern, M.P.P.: You know, I would say right off the bat that that does not reflect the lived experiences of people with MS and seniors and people with chronic health conditions across the country who are telling us that they cannot afford their drugs, that they are going off of their drugs or skipping doses. And we do hear, you know, I think I’ve shown that the MS medications have gone up exponentially and that the patients are paying a percentage of costs of that cost and their coinsurance. But it's not just our medications. A lot of medications are going up dramatically. And it’s like you said, you can, you know, kind of cherry-pick those statistics, but that doesn’t mean that people aren't faced with the choice of, you know, buying their groceries or taking their medication.
Senator Warren: Okay. So prices are going up and people are feeling it when they go to fill a prescription. Let's take a look at PhRMA's third argument. PhRMA blamed everyone but themselves for higher prices. They claimed that middlemen like pharmacy benefit managers, pharmacies, insurance companies were more to blame than the manufacturers. And look, don't get me wrong. I know there are some serious problems with the middlemen. But none of those problems absolves Big Pharma for their part in the price increases.
So Dr. Conti, when you think about brand name drugs – especially the very expensive ones – is it fair to say that brand-name drug manufacturers collect more revenue from drug sales and have higher profit margins than the middlemen that PhRMA is trying to blame for the price increases?
Dr. Conti: Yes. Absolutely. Research shows that- that the industry itself is benefiting off of the- of the high list prices they’re setting and the year over year price inflation that they are experiencing on these products. The only way that the PBMs are enriched by that is if there is competition in these markets. There is no competition in these markets, and therefore, there's no rebates. And therefore, the PBMs aren't benefiting. It is the companies themselves that are benefiting from the high prices and price increases that they are setting. The companies’ own documents support this claim.
Senator Warren: Thank you. And I appreciate your analysis of the data here.
You know, what we have happening in the drug industry is exactly what is happening throughout the economy. Big drug manufacturers have outsized market power and they face little or no competition for their brand name drugs – so basically they are free to increase prices exactly as much as they want to.
That hurts patients, it drives up inflation, and it needs to stop. And that’s why we need to pass legislation that lets Medicare negotiate for lower prices and cut costs for beneficiaries. And it’s why the administration also needs to use its existing authorities, such as compulsory licensing and march-in rights, to rein in drug prices immediately. We know what the solutions are. We just need to put them in place and get it done.
Thank you. Thank you, Mr. Chairman.
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