Drug Prices – The Senate is Watching-Healthcare Finance
The Senate Committee on Aging is looking into drug prices and has requested price related documents from Valeant Pharmaceuticals, Turing Pharmaceuticals, Retrophin and Rodelis Therapeutics. Significantly high price increases have recently been seen from these companies and have raised questions from Senators within this committee. Starting today 11/9, the Senate Committee will hold hearings to investigate this unusual price activity.
The committee’s investigation was sparked by one pharmaceutical company planning to raise the price of Daraprim, an antiparasitic compound, from $13.50 per pill to an outrageous $750 per bill. Luckily, the plan to make that change was aborted but just the nature of such an increase generated the curiosity of the committee.
Healthcare organizations nationwide have repeatedly cited the rising cost of drugs as a major concern and an impediment to affordable healthcare. Price increases in the cost of drugs have exceeded the cost of hospital services and individual physician services.
“The sudden, aggressive price hikes for a variety of drugs used widely for decades affect patients and healthcare providers and the overall cost of health care,” Senator Susan Collins (one of the committee members) said in a statement. “These substantial increases have the potential to inflate the cost of healthcare for Americans, especially our seniors, by hundreds of millions of dollars each year.”
“Substantial price increases” are going to be examined by the senate on drugs considered “off-patient” loosely defined as generic or not subject to patient restrictions. Mergers and acquisitions activity between pharmaceutical companies are still another target for investigation. Sometimes immediately following such business consolidation, dramatic price increases have been seen. A recent Justice Department investigation was initiated against pricing practices by Merck, Lilly and Valeant.
Senate investigating bodies will ask for financial information regarding the pricing strategies for Medicaid rebates. This is a revenue source for Medicaid as drug manufacturers pay these rebates to the government. It is suspected that the calculation formula may not be appropriately used thus cheating Medicaid of its rightful revenue.
The efforts here seem to be bi-partisan and are not necessarily politically motivated.
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