High drug prices: Congress can't agree on a solution or even who's to blame

House Democrats and Republicans who released competing probes into prescription drug prices last week agreed on one thing: It costs too much to fill a prescription.

That’s where the agreement ends.

Democrats on the House Oversight and Reform Committee place the blame squarely on the shoulders of pharmaceutical companies. Republicans, on the other hand, blame pharmacy benefit managers.

The Democrats on the committee launched the probe into prescription drug prices in January 2019.

“What the Committee has learned should be troubling to lawmakers, taxpayers, and any American who has ever struggled to afford their prescriptions,” committee Chairwoman Rep. Carolyn Maloney, D-N.Y., wrote, in a letter to committee members. “Drug companies have raised prices relentlessly for decades while manipulating the patent system and other laws to delay competition from lower-priced generics.  These companies have specifically targeted the U.S. market for higher prices, even while cutting prices in other countries, because weaknesses in our health care system have allowed them to get away with outrageous prices and anticompetitive conduct.

The panel’s Democratic probe centered on 10 companies that sell 12 drugs that are among the most expensive in the Medicare system.

The committee’s findings include that:

• Pharmaceutical companies “aggressively” increase prices to meet revenue targets and executive compensation agreements create incentives to raise prices. The report stated that the companies included in the probe increased prices more than 250 times on the 12 drugs examined.
• Drug companies target the U.S. market and rely on the Medicare program to increase revenue. The companies maintained or lowered prices in the rest of the world, in part because Medicare is unable to negotiate directly for lower prices.
• Drug companies use the patent system and Food and Drug Administration market exclusivities to suppress competition. The companies in the committee’s probe have obtained more than 600 patents on the 12 drugs, which could extend their monopoly periods to almost 300 years.
• Drug companies use patient assistance programs as a public relations tool provide sustainable support to patients.
• Research and manufacturing costs do not justify price increases. “The Committee’s investigation found that companies’ investments in R&D are far outpaced by revenue gains,” the report states. “The investigation also found that even if the pharmaceutical industry collected less revenue due to pricing reforms, drug companies could maintain or even exceed their current R&D expenditures if they reduced spending on stock buybacks and dividends.”

Republicans place the blame elsewhere.

“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,” said Oversight and Reform Committee ranking Republican Rep. James Comer, R-Ky. “Pharmacy Benefit Managers must be held accountable for their role in rising prescription drug prices, and Congress must take on PBMs to implement transparency and restore competition.

The Republicans charge that:

• PBM practices impact patient health by requiring require prior authorizations that can cause lengthy delays for patients.
• The managers use market leverage to boost profits rather than reducing costs for patients. Drug manufacturers agree to discounts or pay rebates in order to get their products placed more favorably on formularies. Those savings often are not passed on to patients.
• Manufacturers increase prices for their drugs in an effort to offset rebates or discounts demanded by PBMs.
• PBMs own their own pharmacies, which creates conflicts of interest, harms competition and distorts the market.

Since there is little agreement on the cause for high prescription drug prices, there is little agreement between the parties about how to solve the problem.

Comer said there are 22 Republican and bipartisan legislative solutions that could help overhaul the system and that would result in lower prescription drug costs.

Many of those legislative solutions would require PBMs and the federal government to make public specific information related to prescription drug pricing and the pharmaceutical supply chain.

Democrats, on the other hand, say that the “Build Back Better” plan from the Biden Administration would give the federal government the power to negotiate prices for some of the most expensive drugs.