Report from House Democrats accuses drug companies of gaming the system

The report comes as Democrat leadership ramps up pressure on the Senate to pass the party’s sweeping social spending bill.

“This so-called investigation has ignored the real affordability problems people face, like rising deductibles and other out-of-pocket costs,” said a PhRMA representative. (Photo: Shutterstock)

House Democrats accuse drug manufacturers of unfairly raising prices and gaming the system to delay generic competition in a way that is “unsustainable, unjustified and unfair to patients and taxpayers.”

The party on Friday issued a report that culminated a three-year investigation of 10 companies that sell 12 of the most expensive drugs, including insulin, to Medicare. The report found that those companies collectively raised prices more than 250 times. The drugs in the committee’s investigation now have a median price almost 500% higher than when they were brought to market.

All 10 companies have compensation structures that tie incentive payments to revenue and other financial targets, and several companies directly tied incentive compensation to drug-specific revenue targets, the report found.

“The investigation has provided a rare glimpse into the decision-making of many of the world’s most profitable drug companies,” said Carolyn Maloney, D-N.Y., chair of the Oversight and Reform Committee. “Reforms are also needed to make pharmaceutical R&D spending more transparent and prevent anti-competitive practices that suppress generic competition and keep prices high.”

Drug manufacturers fired back, saying the focus on price is misleading because many patients receive discounts.

“This so-called investigation has ignored the real affordability problems people face, like rising deductibles and other out-of-pocket costs,” said Debra DeShong, executive vice president for public affairs for PhRMA. “This is nothing more than a partisan exercise to justify an extreme proposal that will restrict patient access to lifesaving cures and treatments. We think there’s a better way that would lower costs at the pharmacy, while preserving choice, access and innovation.”

Committee Republicans, led by ranking member James Comer, R-Ky., offered their own perspective, focusing on the role of pharmacy benefit managers. “Democrats talk a big game when it comes to lowering prescription drug prices, but they refuse to conduct oversight over the middlemen who are driving up costs for patients to increase their bottom line,” he said.

The Democratic report comes as party leadership attempts to ramp up pressure on the Senate to pass the party’s sweeping social spending bill, which contains several provisions to curb drug costs. At the same time, the report lays out a roadmap of what else the party hopes to achieve on drug pricing beyond the social spending bill.