March 16, 2022

Warren, Klobuchar, Porter, Schakowsky, Colleagues Call Out Drug Manufacturers For Providing Misleading Information on High Drug Prices

“Your letter was simply unresponsive to our concerns, leading to one clear conclusion: there is no good explanation for drug manufacturers’ behavior other than corporate profiteering.”

Washington, D.C. - United States Senators Elizabeth Warren (D-Mass.) and Amy Klobuchar (D-Minn.) and Representatives Katie Porter (D-Calif.) and Jan Schakowsky (D-Ill.), along with Senators Maggie Hassan (D-N.H.), Ron Wyden (D-Ore.) and Representatives Peter DeFazio (D-Ore.) and Susan Wild (D-Pa.), sent a letter to the CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA) after receiving an inadequate response to their March 1, 2022 letter. In their initial letter, the lawmakers expressed concern over findings from two new analyses that revealed troubling, widespread, and rapid price increases for brand name drugs in January 2022 and sought an explanation for how and why drug manufacturers imposed these new and harmful drug increases. PhRMA’s response, however, failed to answer key questions. Instead, the trade group for brand drug companies provided misleading information about brand drug manufacturers’ price increases and their impact on patients at the pharmacy counter — shifting blame from brand drug manufacturers, who have a long history of using their monopoly power to raise prices, to other actors in the drug delivery chain.

“Your letter was simply unresponsive to our concerns, leading to one clear conclusion: there is no good explanation for drug manufacturers’ behavior other than corporate profiteering,” wrote the lawmakers. “Congress and the public deserve clear answers about brand name drug price increases affecting millions of Americans.”

Today’s letter from the lawmakers noted multiple problems with PhRMA’s response:

PhRMA provided misleading information about brand drug manufacturers’ price increases. PhRMA claimed, despite the evidence, that manufacturers were not increasing brand name drug prices. To justify this claim, PhRMA presented highly misleading data that conflate brand name drug prices with generic prices, despite the fact that brand name drug manufacturers generally face little competition, while the generic drug market tends to be highly competitive.

PhRMA also provided misleading information about the impact of drug manufacturers’ price increases on patients at the pharmacy counter. PhRMA claimed that their rapid list price increases were offset by discounts and rebates and therefore did not affect consumers at the pharmacy counter. But this is patently false. A detailed analysis by experts from Brigham and Women’s Hospital and Harvard University studied the impact of price increases and concluded that “patients with deductibles and coinsurance pay more when manufacturers raise a drug’s list price and do not directly benefit from confidential rebates paid by manufacturers to insurers.” Additionally, the copay amount that Medicare Part D beneficiaries pay for their medication is often based on the drug’s list price. Contrary to PhRMA’s assertions, the rapid and broad increases in brand name drug manufacturer list prices are ultimately passed on to patients at the pharmacy counter.

PhRMA also misled by attempting to shift blame away from drug manufacturers. PhRMA’s response appears to absolve brand drug manufacturers of any blame for their own decisions to increase prices, and their attempt to reassign blame for high drug prices to every entity except drug manufacturers completely misses the point. Even a PhRMA-funded study reveals, not surprisingly, that brand name drug manufacturers receive more revenue from the sales of their drugs than any other individual entity in the supply chain – more than three times as much as pharmacists, and approximately 2.5 times as much as the rebates received by pharmacy benefit managers. Brand name drug manufacturers have substantial market power, and are responsible for the price increases they impose on already-expensive drugs.

The lawmakers have requested that PhRMA provide full and complete responses to their questions no later than March 22, 2022.

Senator Warren has called on the government to use every tool to lower drug prices and crack down on corporate profiteering to bring down consumer costs:

On February 18, 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.
On February 2, 2022, during a hearing of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth, Senator Warren called out big pharma and insurance companies’ tricks to squeeze taxpayers and Medicare beneficiaries. She also 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

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