Pharmaceutical Companies and Drug Pricingby Senator Sherrod Brown
Posted on 2015-10-05
BROWN. Mr. President, we have seen this movie before. It was 4
years ago that a drug company in St. Louis raised the price
dramatically on a drug that was administered to pregnant women, a shot
they took once a week for 20 weeks that significantly reduced the
incidents of low birth weight babies. Now we see a headline on the
front page of the New York Times today which reads ``A Drug Company's
Price Tactics Pinch Insurers and Consumers.'' Two weeks ago another New
York Times headline read ``Drug Goes From $13.50 a Tablet to $750,
Overnight.'' In April the Wall Street Journal ran an article titled
``Pharmaceutical Companies Buy Rivals' Drugs, Then Jack Up the
Prices.'' The reporters who did the investigating in these articles all
found the same thing: Pharmaceutical companies buy up the rights of
older existing drugs where all the costs from research have been
recouped and raise prices dramatically overnight.
In its most recent article, the Times investigated Valeant Pharmaceuticals, a company that recently raised the cost of the lifesaving drug Cuprimine more than fivefold. The Times interviewed Mr. Bruce Mannes, a 68-year-old retired carpenter in Michigan who has relied on Cuprimine for 55 years to treat his Wilson's disease. In May Mr. Mannes was paying $366 a month for Cuprimine. Today he is forced to pay $1,800 a month just to stay alive. It is the same drug and the same dosage. It was $366 a month not too long ago. Today it is $1,800 a month just to stay alive.
It is not just Mr. Mannes who is left on the hook to pay for his medicine, which has more than quadrupled in cost. The taxpayer-funded Medicare Program will now be spending $35,000 a month to cover its portion of his pills because current law prohibits Medicare--because of the power of the drug companies in this institution--from negotiating more favorable drug prices.
Cuprimine is not a cure for Wilson's disease. Mr. Mannes must take this drug for the rest of his life. It doesn't cure him, but it keeps him alive.
Valeant did nothing to improve this drug. They don't claim that. It has been around for decades. They have done nothing to invest in a cure. Instead, the company bought the rights to an existing medicine and raised its price.
Remember, I said that in May Mr. Mannes was paying $366 a month. Today he is paying $1,800 a month.
This story, unfortunately, is outrageous, and it is not an isolated story. The Times reports that this year alone Valeant has raised the price of its drugs by an average of 66 percent. When Valeant acquired Salix Pharmaceuticals earlier this year, it raised the price of its diabetic drug Glumetza by 800 percent. These are drugs that have been out there. They don't need to recoup their costs of research and development. These are drugs that have been used for many years at a significantly lower price. They buy these companies--these drugs and jack up the price. After Valeant acquired the drug Isuprel, which treats slow or irregular heart rate, it raised the price by more than $30,000.
Valeant's investors and its billionaire CEO are, of course, getting rich but always on the backs of America's seniors and American taxpayers, who pay the price. Seniors on Medicare face skyrocketing bills for lifesaving drugs they cannot afford. Insurance companies sometimes stop covering drugs altogether.
Janis, from Lower Salem in Washington County, OH, wrote to me about the drug Glumetza. She wrote: My husband has gotten the drug Glumetza for $10 each refill of 180 pills. When he re-ordered this prescription this morning the pharmacy called him to say that Glumetza now costs $3,000 for a 15-day supply. His insurance has a limit of $3,000.
The pharmaceutical companies are beginning to look like the drug cartels of Mexico.
The insurance companies are being forced to cut benefits or increase their cost to consumers who have worked hard all their lives and earned their health care benefits. He and I cannot continue to afford to pay these out of pocket expenses on a fixed income.
We know that Janis in Washington County, OH, isn't alone. We also know that all Americans face higher health care premiums when insurance companies and hospitals are forced to absorb the cost of this price- gouging.
Jeffrey Rosner of the Cleveland Clinic told the Times that the nine drugs with the worst price increases cost that hospital alone an additional $11 million a year and that Valeant's products made up 80 percent of that. Yet their billionaire CEO is doing very well.
Valeant is not the only company that profits from its business of buying up old drugs and jacking up the price. We remember the coverage last month about Turing Pharmaceuticals, which raised the price of a drug called Daraprim, which is used to treat a life-threatening parasitic infection, from $13.50 to $750 a tablet overnight. The company Rodelis Therapeutics recently raised the price of a drug to treat multidrug-resistant tuberculosis from $500 to over $10,000 for the same number of pills.
These are not scenarios of pharmaceutical companies charging higher prices to finance the development cost of new drugs. Take Valeant for example. Valeant spends 3 percent of its sales on research and development. Traditional drug companies tell us they spend 15 to 20 percent. Traditional drug companies will tell you they spend 15 to 20 percent of their revenues on research and development. That is why they need to charge high prices at the beginning, at least during their patent protection period--to recoup, they will say, the $500 million, $600 million, whatever it costs, in research and development. Valeant is buying drugs where that research and development have already been recouped. They spend only 3 percent of their sales on research and development.
So where does Valeant's money go? One might hope it would support American pharmaceutical manufacturing jobs or pay back into our tax system to support lifesaving biopharmaceutical research at the National Institutes of health. But, no, what actually is happening is infuriating. Valeant, which shifted its profits overseas in 2010 to avoid its U.S. tax obligation, buys up the rights to existing pharmaceutical companies, lays off workers, hikes prices by eight- nine- tenfold, and then expects patients, hospitals, and taxpayers to pick up the tab. It is not right.
As I said at the outset, we have seen this before. Valeant, Turing, and Rodelis are not the first companies to try this shady--and ``shady'' is too kind a word--business model. They won't be the last. In 2011, KV Pharmaceutical created an overnight monopoly on the lifesaving drug 17P, a preterm labor-prevention drug--a progesterone-- for pregnant women. KV Pharmaceutical didn't invent the drug. It spent no money on R&D. It spent no money on clinical trials, which are also expensive but not for them. The drug had been around for decades. It was normally compounded at pharmacies and at hospitals to treat pregnant [[Page S7119]] women. What did it do? It applied to the FDA for 7 years of exclusive coverage under the Orphan Drug Act and changed the name from 17P to Makena. That is it. They proposed raising the price by almost 15 percent overnight. It was a $10 drug initially--$10, taken 20 times, so it cost about $200 for the regimen, and they raised the price to $30,000. Imagine that.
We have thousands of pregnant women who have had a history of preterm births, and their doctors say to these women: You should take this compound, this progesterone, P17. The cost is only $200. You will get a shot every week for 20 weeks in a row.
Then all of a sudden the price of $200 is raised to $30,000. What happens? Some places, Medicaid won't pay. Other places, private insurance won't pay. In many cases, women simply wouldn't take this progesterone, and the problems of low birth weight babies increases.
The potentially devastating impact on our country is already too high for the preterm birth rate. Fewer women are able to afford the drug. When that happened 4 years ago, I wrote to the company's CEO asking them to consider the price increase. The senior Senator from Minnesota, Ms. Klobuchar, and I sent a letter to the FTC urging an investigation. Together, we kept the pressure on the company. Frankly, we embarrassed them, as they deserved. So far the drug has stayed more affordable. We need to do the same thing today. Valeant and companies like it must not be allowed to get away with fleecing consumers and taxpayers.
I am calling on my colleagues on the HELP Committee to hold hearings on this price-gouging. We must work together--Congress, the media, the public--to expose this kind of behavior, maybe a little shame. I don't normally like to do that, but when a CEO makes this kind of money by fleecing so many people--especially when it comes to low birth weight babies but also where people need these moderately priced drugs to stay alive--I think it is time to out them and put pressure on these companies.
One thing we can also do, if my colleagues would wean themselves off of drug company contributions, is give Medicare the authority to negotiate drug prices. Many of these drugs with massive price increases are taken by large numbers of seniors who are on Medicare. We know the Veterans Administration uses the buying power of millions of American veterans to negotiate directly with drug companies to bring down significantly the cost of these drugs. For too long the pharmaceutical companies have profited off of their ability to charge more vulnerable Medicare beneficiaries higher prices for their drugs. Current law expressly bans Medicare from negotiating with pharmaceutical companies--again showing the power of drug companies lobbying my colleagues in this body--even though the government can negotiate bigger discounts with private insurance companies.
This summer I helped introduce the Medicare Prescription Drug Savings and Choice Act, which would allow seniors to enroll in a Medicare Part D plan administered directly by Medicare instead of a private insurance company. This legislation requires the Secretary of Health and Human Services to negotiate directly with drug companies to get the best prices for our seniors. Seniors should be able to get drug coverage directly through Medicare and not be forced to buy from a middleman.
The purpose of lifesaving drugs is that--to save lives, not to line the pockets of Big Pharma executives and investors. We owe it to the people we serve--the people who elect us--to put a stop to the price- gouging that is bankrupting patients and overcharging Medicare, straining hospitals, and fleecing taxpayers.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The senior assistant legislative clerk proceeded to call the roll.