The drug industry’s secretive pricing practices are coming under increasing scrutiny in Congress. According to a recent poll, the public thinks making sure that high-cost drugs for chronic conditions are affordable to those who need them is a top priority for Congress and the President. Government action to lower prescription drug costs ranks second. But so far, Congress isn’t saying how it plans to stem rising drug costs. At issue — whether Medicare should negotiate drug prices, and whether the government should take steps to limit drug makers’ profits.
The Senate Special Committee on Aging recently held a hearing, which focused on a few companies that have been drawing public outrage for egregious price increases. Public anger erupted last fall when Turing Pharmaceuticals CEO, Martin Shkreli announced a 5,000% increase in the price of Daraprim — from $13.50 to $750 per pill. The 62-year old drug is the only approved treatment for a rare parasitic infection that mainly strikes pregnant women, cancer and AIDS patients.
On the heels of the hearing, Turing’s then CEO, Martin Shkreli, was arrested for securities fraud. Shkreli is accused of running his companies like a Ponzi scheme using each subsequent company to pay off defrauded investors of the prior company. Shkreli was removed as chief executive of Turing Parmaceuticals.
But hundreds of other generic prices have climbed in recent years as companies merged. The mergers are occurring, even though “Generic drug companies can still earn a profit at these prices because the cost of actually producing most drugs is pennies per pill,” said Gerard Anderson, of the Johns Hopkins Bloomberg School of Public Health. Generic drug makers have figured out that fewer companies selling generics —mean higher profits for all.
Medicare Part D would save an estimated $16 billion per year and reduce the number of people who don’t fill their prescriptions for financial reasons if Medicare were to pay the same drug prices as Medicaid or the Veterans Administration. TSCL believes Medicare must be given the authority to negotiate prices with drug makers, just as it does with doctors, hospitals, and other healthcare providers. What do you think? Take TSCL’s 2016 Senior Survey at www.SeniorsLeague.org.
Sources: “Sudden Price Spikes In Off-Patent Drugs: Perspectives From The Front Lines,” Testimony for the Record of Gerard Anderson, PhD, Johns Hopkins Bloomberg School of Public Health. “Medicare Part D Medication Prices Are Significantly Higher Than Medicaid,” Veterans Health Administration, Public Citizen, July 23, 2015. “Martin Shkreli’s Latest Plan To Sharply Raise Drug Price Prompts Outcry,” Andrew Pollack, The New York Times, December, 11, 2015.