Doggett Opening Statement at Health Hearing on Promoting Competition to Lower Medicare Drug Prices
This hearing continues our inquiry into pharmaceutical pricing, which our full Committee began last month. I was encouraged at that hearing that a number of our colleagues from both parties reflected on the medication problems about which their own constituents have been expressing concern. Today, we will have a special focus on the role that competition can play in bringing down soaring prices and on the multiple barriers, deliberately constructed by the industry, to prevent competition from working effectively.
One such solution is ending so-called pay-for-delay settlements where brand-name and generic manufacturers agree to anticompetitive deals that keep competition off the market. I have introduced legislation, HR 1344 the Competitive DRUGS Act, to prohibit these deals and impose tax penalties on companies that engage in this behavior. I hope that we can find common ground today to support reasonable proposals like this.
Our witnesses last month, and again today, offer more evidence of the reality that so many Americans confront—essential medicines that they cannot afford—that they either go without or obtain by jeopardizing their financial health. Prices for the most commonly prescribed brand drugs under Medicare Part D have soared up to 10 times the rate of inflation. And this is a problem not only for individual patients but also for taxpayers. The Medicare Trustees expect drug spending to nearly double over the next decade.
Unfortunately, there is just no miracle cure for price gouging. While, as our witnesses explain, Congress should be engaged in a number of actions, I believe some of these are within our committee’s jurisdiction that we’ll hear about today and some of them are informative but a little outside of our jurisdiction and require working with colleagues on other committees. I believe that the most important of those measures is to use bargaining power to lower prices for those who rely on Medicare, much the same way that the Veteran’s Administration has done for years on behalf of our veterans.
When over 15 years ago the Medicare Prescription Drug program, which was voted on in this committee, was narrowly forced through the House in the middle of the night after considerable arm twisting, one of the provisions that was inserted was a notable section that provided a complete prohibition against Medicare negotiation of drug prices. In 2007, every Democrat and 24 Republicans approved legislation to repeal that costly limitation, but not surprisingly, it was blocked in the Senate. Medicare negotiation is also the approach that candidate Trump recommended to save hundreds of billions of dollars through what he called “bidding.” And he pointed out, the reason that we don’t do it is “because of the drug companies.”
Importantly, that 2007 bill lacked a mechanism for addressing what happens when negotiation is unsuccessful. The most common way of addressing that situation for a manufacturer who will not negotiate, is to simply refuse to cover the drug—to exclude it from the list of approved drugs or what’s called the formulary. That, of course, produces claims that a life-saving medication is being denied to someone who is relying on Medicare. That’s basically the argument that fills the multicolored ads in every Capitol Hill newspaper almost daily against the Trump Administration’s pending Part D proposal. So, I have advanced an alternative to that, which we’ll hear more about today, as a way of assuring that every drug is available but some competition can hopefully bring the price down.
Unwilling to yield their monopoly power, we also hear a number of scare tactics that insist there is no way we can have reasonable prices and still encourage essential innovation. Our witnesses today can respond to those arguments.
I think all of us want to encourage cures and treatments for dreaded diseases before we get them ourselves or a member of our family or a loved one or a friend. Despite its immense lobbying power, despite government funded research, despite monopoly profits, Big Pharma, I believe, has actually not done a very good job on innovating and providing the medications we need. It’s seldom worried with a competitor, and so monopolies and oligopolies are not known for their innovative spirit. They’re not known for that quality in any industry. Over the last decade 74% of all pharmaceutical patent applications were not for new innovative cures, but were for modifying existing drugs, which often took the form of what’s referred to as “evergreening,” simply to protect monopoly pricing, not to provide new drugs.
And taxpayers have been funding a significant amount of this research. From 2010 to 2016, every single newly approved drug relied on taxpayer-funded research. The taxpayer pays for the research, the government approves the monopoly, and unlike other modern countries, the pharmaceutical company faces little or no restraint on the prices that it charges.
During the last year, Big Pharma has changed its approach from denying that there is any problem at all, to pointing the finger at everyone else in the supply chain. Strangely, I have heard Secretary Azar, who I hope will be before our full committee over the budget in the coming months, claim that Medicare negotiation is not necessary because Part D insurers are already so adept at negotiating and then turn around and blame price hikes on the Prescription Benefit Managers who did the negotiating. We do need to examine the practices of these PBM’s, and they may well be contributing to some of the high prices experienced by consumers across the country, but without addressing the manufacturer who sets the price, I believe we’ll still have too many people having to cut their pills when prices are not cut.
I believe we have a responsibility to ensure that patients come first and that it is their health and livelihoods that are the only thing that are nonnegotiable. Unaffordability and inaccessibility are not the unavoidable side effects of innovation. They’re the result of unrestrained monopoly power. I thank all of our witnesses for joining us today to examine these issues and welcome the comments of our ranking member, Mr. Nunes.