In February, I wrote in this column about a series of hearings that were planned in the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. The Subcommittee, on which I serve, wanted to launch an in-depth examination of rising insulin prices. Insulin is a necessity for millions of Americans suffering from diabetes, and soaring prices are a hardship for them.
We have since had two hearings, the first featuring testimony from advocates for diabetes patients and medical professionals, and the second with testimony from executives of insulin manufacturers and pharmacy benefit managers (PBMs).
At the second hearing, held on April 10, I asked questions about fees in the drug supply chain. Although the focus was on insulin, my questions would apply to prescription drugs more broadly, and the answers I received highlight why many are frustrated by high prices for products besides insulin.
I noted that PBMs charge fees to and demand rebates from their supply chain partners that are based on a percentage of the product’s list price. Why structure the fees that way?
One of the responses, echoed several times during my five minutes of questioning: “It’s the current system.”
That answer is inadequate. Manufacturers complain that they have to offer big rebates to get their products on insurance formularies (the lists of drugs covered by the plans). Larger rebates incentivize higher list prices, as the list prices are then raised to incorporate the various fees and rebates associated with the drug.
As far as fees go, there should not be a great variation in the actual costs of processing a hypothetical $4 drug versus a $4,000 drug, but that is “the current system.” A fee based on a percentage of the cost of these drugs obviously varies significantly. I suggested changing “the current system” and adopting flat fees. The manufacturing executives responded by saying that they attempted negotiations to do so but the PBMs would not agree to them.
PBMs defended “the current system” by claiming that prices would be even higher without their negotiations with manufacturers. That argument is hard to evaluate, however, because of a lack of transparency. How can we tell what effect negotiations would have on prices without more information?
What we do know is that some people are grievously injured by the system now in place. If you have the right insurance, you may not be hurt. But if you have a high deductible, are in the “donut hole” of prescription drug expenses not covered by Medicare Part D, or are not insured, you will likely note the negative impact of the current system on your wallet.
In the first insulin hearing, we heard from a patient advocate who described diluting her insulin to make it last longer. Such actions can be risky, but people sometimes feel they have no choice.
Both Republicans and Democrats expressed frustration at these hearings and offered words of warning to the drug companies and PBMs that they may not like our legislative solutions.
I would argue that the drug industry has some options before it to avoid that outcome. They can work to lower prices and increase transparency in the process of setting prices so we can see what is taking place.
As your elected representative, I can’t accept “trust us” from executives of the drug industry when we question them about their practices. Before we can take them at their word, they need to instill transparency in the process so we can see matters for ourselves.
To steal a phrase from Ronald Reagan, I am willing to trust but I must verify. I cannot verify without seeing all appropriate pricing data, which the PBMs have been unwilling to give thus far.
Too many of my constituents have told me about the impact high prescription drug prices have on their lives. I’m looking for solutions in these hearings on insulin prices so the people who need it, and people who use other vital drugs and products to treat their medical issues, can find relief both in their health and their pocketbook.
If you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671. To reach my office via email, please visit my website at www.morgangriffith.house.gov. Also on my website is the latest material from my office, including information on votes recently taken on the floor of the House of Representatives.
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