Neal Opening Statement at Markup of the Prescription Drug STAR Act
(As prepared for delivery)
With today’s consideration of H.R. 2113, the STAR Act, we will take a first, bipartisan step to address the issue of high drug prices.
So far this Congress, we have held full and subcommittee hearings on this important issue. During that time, we heard from numerous witnesses about how high prescription drug prices and a broken system are causing financial hardship, impacting Americans’ out-of-pocket costs, and driving up total health care costs.
We have heard from patients like Ms. Ojewumi. In her compelling testimony before the committeee she described missing doses, failing to fill prescriptions and other hardships because of the costs of her medications.
My home state of Massachusetts is home to world-renowned health care innovation – including drug development. I am proud that such work plays a vital role in treating diseases and is an important part of our local, state, and regional economy. But I am also aware that the high cost of this innovation often gets excessively passed to the consumer.
One of the challenges we face is understanding the underlying problem. The drug companies point to the PBMs – who point to the insurance companies – who point to the hospitals. But we know who isn’t to blame - the families, seniors, children and patients. They are the ones who get left holding the bag of excuses and bad deals – and they are ultimately the ones left paying for the problem.
Blaming aside, one thing is clear: Everyone wants a solution. How to get to that solution is important and will take time. There is not a magic bullet, and bringing this problem under control will require multiple changes to our laws.
Today’s legislation takes a meaningful first step to address a critical part of the drug pricing crisis: transparency. If consumers and payers – like large employers – know more about the drug-pricing process, they will have more tools to make informed health care decisions and be better purchasers of drugs. And this can drive down overall system costs.
The STAR Act takes important steps to promote drug pricing transparency in a number of ways. First, it requires manufacturers to report on the causes of high drug prices. When a product increases more than 10 percent a year or 25 percent over three years, manufacturers must report on the cause of that increase.
I know companies are unhappy that this language covers price hikes that occurred in the past three years, but as we all know, drugs like Insulin, EpiPen, and Daraprim have seen large price increases – and we want manufacturers to account for that. I also believe, when companies are launching products that cost more than the average Medicare beneficiary’s annual income, the public deserves to understand why the cost is what it is.
The STAR Act also directs drug and device companies to publicly report the price and quantity of the drug free samples that they give to providers. We aren’t prohibiting free samples but we are shining a light on a little-known part of the drug-distribution system. Notably, drug manufacturers spend significantly more on free samples than they do on direct-to-consumer advertising.
Additionally, like current law requirements in the Open Payments system, this reporting applies to manufacturers of devices and supplies, as well as prescription drug manufacturers. The simple reason is that all of these manufacturers provide free samples, and all of these products have seen costs increase exponentially. The device space can be even more opaque than prescription drugs and this sunshine is necessary for a well-functioning marketplace.
H.R. 2113 also requires the Secretary of Health and Human Services to publish information about the discounts and rebates that pharmaceutical benefits managers – or PBMS - achieve in negotiations. This information would be provided to the public in aggregate by class of drug, but a way that will not reveal competitive information. This is important because payers, like large employers and insurance companies who use PBM services, should know which PBM is getting the best discount on the drugs they spend the most on. Transparency makes markets work better.
Finally, H.R. 2113 requires a study about the causes of price increases for drugs used in hospitals and implements a Medicare Payment Advisory Commission and Office of Inspector General recommendation to require all manufacturers to report average sales price if their drug is covered under Medicare Part B.
Today’s legislation is a good first step in tackling a complicated problem. I want to thank a number of our colleagues for their bipartisan work on the many important components of this package - this includes Representatives Chu, Nunes, Horsford, Reed, Doggett, Buchanan, Boyle and Arrington - as well as Representative Spanberger and Representative Schakowsky from off the committee.
Transparency is crucial to increasing our understanding of the market, improving purchasing, and lowering patient and payer costs. Ultimately, innovation is meaningless if Americans can’t afford it.
With that, I want to thank the Ranking Member for his bipartisan collaboration on this important legislation and recognize him for an opening statement.