AHIP Comments Following Senate Finance Committee Hearing On Drug Pricing In America

posted by Kristine Grow

on February 26, 2019

WASHINGTON, D.C. – Matt Eyles, president and CEO of America’s Health Insurance Plans (AHIP), issued these remarks following today’s Senate Finance Committee’s hearing on drug pricing, “Drug Pricing in America: A Prescription for Change, Part II”:

“Drug prices are out of control, and we appreciate the bipartisan approach that Congress is taking to get to the root of the problem: the prices set by drug makers, and that they raise year after year, even on products that have been on the market for decades.

“We agree with Sens. Grassley and Wyden that the list price is very meaningful for consumers. We appreciate their close attention to how the list price, which is always 100 percent within the manufacturer’s control, drives affordability and access for everyone. We also appreciate that we heard some expressions of interest by drug makers in working with health insurance providers and Congress to make prescription drugs more affordable for patients.

“But we still heard much more from Big Pharma about casting blame on others for high prices. Drug makers alone set drug prices, they alone increase prices, and they alone could decide to reduce drug prices.

“Higher drug prices mean higher premiums and higher expenses for everyone. That’s why health insurance providers and our PBM partners are Americans’ bargaining power – negotiating with Big Pharma for lower costs. We will continue to fight for consumers to protect them from rising prices – but Big Pharma must be held accountable and clearly explain why prices are so high.

“A major pillar of Big Pharma’s strategy is their unanimous support for a proposed rule to fundamentally change how rebates are treated in federal programs. But this proposed rule will increase premiums for tens of millions of seniors by 25 percent and taxpayer costs by nearly $200 billion, according to the federal government’s own expert analysis. That’s putting a lot of extra money in Big Pharma’s pocket.

“There are better solutions that increase competition and make more information available to all Americans about how manufacturers set drug prices. Let’s work together to truly lower drug prices and health care costs for all Americans.”

Let’s Clear the Record

Today’s hearing before the Senate Finance Committee, “Drug Pricing in America: A Prescription for Change, Part II,” included several misleading statements. Let’s look at the facts.

Rebates do not drive list prices.

Big Pharma wants everyone to believe that negotiating for lower drug costs for millions of Americans makes drug prices go up. But branded drug makers generally decide whether to offer rebates based on the competition their drug faces in the market. Generic drugs, which represent about 88 percent of Part D drugs dispensed, are typically not rebated.

Rebates are returned to consumers.

Savings from rebates go directly to consumers. Rebates mean lower health insurance premiums and out-of-pocket costs for millions of hardworking Americans. Health insurance providers negotiate with drug companies, and a result we save patients 40-50% on their annual prescription drug and related medical costs, compared to what they would have spent.

Coupons cause prices for consumers to go up, not down.

Big Pharma uses copay coupons to compete against cheaper generic medications. Locking patients into high-cost brand-name medications raises costs for those patients – and premiums for everyone. Copay coupons are a scheme that allows drug makers to keep their prices artificially high, while they pay for a few months and pass the higher cost along to everyone else for most of the year.

Big Pharma spends more on marketing than on research and development.

According to the Washington Post, 9 out of 10 big pharmaceutical companies spend more on advertising than they do on R&D. In fact, Big Pharma spent $6.4 billion on advertising in the United States in 2016, a 5% increase from 2015. The ad spend continues to skyrocket as Big Pharma looks to woo consumers. In fact, pharmaceutical ads were the 6th largest category of advertising, accounting for 8% of total television ad revenue, up six places from the 12th largest category of advertising in 2012.

Every person deserves access to the medications they need at a price they can afford. We should not have to choose between innovation and affordability. With the right solutions and genuine collaboration, we can have both.

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