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U.S. Rep. Rosa DeLauro and Connecticut State Comptroller Kevin Lembo put pharmaceutical companies on notice that prescription drug price- gouging is in their crosshairs.
Lembo and DeLauro tag-teamed a talk at Tower One/Tower East senior living community Thursday about the rapid rise in prescription drug costs, and to ask the residents to join them in taking on the companies that make those drugs.
DeLauro is part of a Congressional Affordable Drug Pricing Task Force calling for an investigation into the increasing cost of prescription drugs that have been on the market for years, as well as the astronomical cost of certain drugs for treating people with HIV/AIDS and hepatitis C. In addition to the hearings, House Democrats have proposed a slate of legislation that would impose greater oversight over how companies price prescription drugs.
“The big pharmaceutical companies try to justify their high prices by saying that they need to get their money back for research and the development cost for new drugs,” DeLauro said. “If the pharmaceutical companies were hurting we could say well, ‘You know they need to be making money.’ They’re making money hand over fist.”
Lembo, who wrote to DeLauro in October urging an investigation, said with recent incidents of pharmaceutical companies like Turing Pharmaceuticals raising the cost of lifesaving drugs such as Daraprim from about $13 a pill to $750 pill, it’s time for Congress to act. A 12-week drug treatment that has been deemed a cure for hepatitis C costs a whopping $150,000.
“This is about life-saving medication,” Lembo said. “This isn’t about yachts and fancy cars and things that are the trappings of wealth. It’s about what people need, and real people who maybe can’t afford some of the prices that have been set.”
As comptroller, Lembo is responsible for purchasing the health care plan for state employees, retirees and their families. He said that costs the state’s taxpayers about $1.5 billion. He said a lot has been done to shrink the cost of providing health care, which is allowing conditions like cancer to be caught in earlier more treatable stages. But he said the pharmaceutical side of the equation is out of control.
“It’s washing away any of the innovation that we’re bringing into the market,” he said. “We clearly need to wrap our brains around this because absent competition you need strong regulation.”
Lembo said the American taxpayer is being hit by costs in several ways. The federal government funds about 80 percent of the research behind new drug development, but then pharmaceutical companies are allowed to set prices that are often so high that most insurance plans won’t cover them, and are often out of the reach of many taxpayers.
DeLauro added while that has often been the case for the costs of new drugs, as in the case with Daraprim, it is increasingly happening to drugs that have been on the market for years.
“While patients and taxpayers are facing higher and higher costs, last year in 2013, five pharmaceutical companies made a profit margin of 20 percent or more,” DeLauro said. “These companies grow their businesses with the benefit of taxpayer sponsored research and they turn around and gouge the same taxpayers without whom the drug may not even exists.”
Lembo also said the government must do something about pharmaceutical companies that don’t actually develop any new drugs, but buy the patents of existing drugs and raise their costs.
“There’s another piece of this: some of these companies have now figured out that they can buy a foreign company, move their place of business to another country and not pay U.S. taxes on their business, while simultaneously the U.S. pays the highest prices for the drug,” he said. “I’m thinking this: ‘If you want to buy a company in Ireland, you want to move your tax base to Ireland, go for it. But the U.S. won’t pay more than the Irish government pays for that drug.”
DeLauro pointed out that pharmaceutical companies and their more than 600 lobbyists fought and won a battle to keep Medicare from negotiating the price of drugs last year, and programs like Medicaid and the AIDS Drug Assistance Program have had to cut back on the drugs they cover.
“Our view is that the trends are not sustainable,” she said. “Big Pharma has been putting profits above patients. Life saving treatments are becoming too expensive for many patients. We have provider budgets coming under strain. States are having difficulty. Health care costs are rising higher and higher. That’s why we’re calling for these investigations. That’s what my colleagues and I are pushing for. We need to get prescription prices under control.”
DeLauro said she has filed legislation that would ban direct-to-consumer marketing of prescription drugs, but fellow Democrats have also filed legislation that would take aim at curbing the power of pharmaceutical companies. That legislation includes:
• The Medicare Prescription Drug Price Negotiation Act, which would require allow the federal government to negotiate drug prices under Medicare Part D.
• The Medicare Prescription Drug Savings and Choice Act, which provides Medicare beneficiaries with a low cost alternative to private part D insurance plans
• The Prescription Drug Affordability Act, which also allow negotiations under Medicare Part D and establish a rebate program for drugs covered under Medicaid and Medicare.
• The No to Drug Ads Act, which would prevent the drug companies from deducting the cost of their advertising as a business expense.
Lembo urged the residents and advocates for senior citizens to support the public policy that will develop along with the legislation that DeLauro and her colleagues are pushing, but to also get educated about the issue and their options. But mostly, he urged them to organize around the problem “and hold government’s feet to the fire.”