The latest from DTC Perspectives

Committee Leaders Request GAO Report on Rx Pricing Trends

Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, and Rep. Henry Waxman (D-Calif.), chairman of the Energy and Commerce Committee, teamed with other representatives to request that the Government Accountability Office (GAO) issue an expedited report on recent prescription drug pricing trends. They have also requested that the GAO submit a proposal to ensure a continual monitoring of prescription price practices.

Other representatives who signed the letter with the request to GAO are: Rep. Pete Stark (D-Calif.), chairman of the Ways and Means Health subcommittee and Rep. John Lewis (D-Ga.), chairman of the Ways and Means Oversight subcommittee.

The request was issued after recent studies and The New York Times published an article indicating that the pharmaceutical industry may be raising prices to establish a higher baseline before healthcare reform passes and perhaps places a limit on drug price increases. The New York Times reported that "the industry has been raising its prices at the fastest rate in years," by approximately 9 percent in the past year. Analysts concluded that the inflation will add more than $10 billion to the total amount Americans spend on prescriptions this year; the national total "is on track to exceed $300 billion this year," noted the Times article. Critics said that such a surge cancels out this year's savings from the $8 billion a year price-cuts previously promised by pharmaceutical manufacturers. They fear that this could change the dynamics of the whole 10-year agreement.

However, manufacturers said that they have increased prices "to maintain the profits necessary to invest in research and development of new drugs as the patents on many their most popular drugs are set to expire over the next few years," as per the Times report. PhRMA senior vice president Ken Johnson issued a response to the news reports, saying they "are based on the misleading use of statistics and sensationalized media reports." Johnson pointed out that the government's Consumer Price Index shows prescription drug prices grew by 2.7% during the 12-month period ending in September.

• "Companies make price adjustments independently as the result of market forces, which include everything from patent expirations to the huge, sunk R&D costs which typically exceed $1 billion for a single medicine, as well as the ability of powerful purchasers to obtain large savings, benefiting patients," he said. "Today, prescription medicines account for only 10% of health care spending – the same as it was back in 1960. Unfortunately, medicines are always looked at as a cost and never seen as a savings – even though medicines often reduce unnecessary hospitalizations, help avoid costly medical procedures and increase productivity through better prevention and management of chronic diseases."

 Click here to read Johnson's full statement.