House committee investigation finds drug companies targeting US for price hikes
The federal government is legally prohibited from negotiating directly with drug companies on behalf of Medicare beneficiaries, a problem cited by some lawmakers.

WASHINGTON, D.C. —  A House committee investigation into the increasing costs of prescription drugs found that some of the largest global pharmaceutical companies are targeting the United States for the biggest price hikes, according to Rep. Carolyn Maloney (D-New York).

“I was astonished to see some of the new documents we will be discussing today,” she said. “The United States is where the drug companies are increasing their prices, much more than in any other country. This is where they are making billions of dollars in profits.”

Maloney — the chairwoman of the Committee on Oversight and Reform — was speaking at the committee’s Sept. 30 hearing to discuss the cost of prescriptions. She said members reviewed more than 1 million pages of internal documents from some of the world’s leading pharmaceutical companies.

Maloney shared a few of the documents, including a slide depicting a world map from one of Celgene Corporation’s internal presentations in 2018. She said it labeled the United States as a “highly favorable market with free market pricing” while the European Union is described as having “stagnated price growth.”

She then read aloud from a document from Teva Pharmaceuticals in 2016 that stated its ability to increase prices was “influenced heavily by (the) U.S. being allowed to hike prices.”

The United States is an easy target, Maloney explained, because the federal government is legally prohibited from negotiating directly with drug companies on behalf of Medicare beneficiaries. The congresswoman said this was why the Senate needed to pass H.R. 3.

H.R. 3, dubbed the Elijah E. Cummings Lower Drug Costs Now Act, was passed by the House last year. It would allow and require the Department of Health and Human Services to negotiate prices for certain drugs, including insulin and 25 brand-name drugs that do not have generic competition.

Some Republican legislators, however, argued the bill would gut pharmaceutical innovation.

“The problem, madam chairwoman, is not that the free market has failed,” said Rep. James Comer, R-Kentucky. “The problem is that overly complex regulations and government interventions in the market have distorted incentives and created barriers to competition.”

The committee also heard from some pharmaceutical industry leaders who said drug companies spend a great deal of their revenue on new development projects.

Teva Pharmaceuticals CEO Kåre Schultz said the company takes great pride in its innovative scientific research.

“In order for any pharmaceutical company to research and develop new drugs or improve old ones, the price of successful medicines must reflect the significant costs of ongoing research and development projects,” he said. “The public only sees and pays for the drugs that are ultimately approved by the government … but you have to expend a lot of resources, and endure many disappointments, before bringing to the market safe and effective medicines.”

Maloney objected to this notion and said the committee’s investigation found drug companies hike up prices to meet their earnings targets, or sometimes to ensure that executives can get their personal bonuses.

The House will continue the hearing Oct. 1.

Contact Katie King at [email protected] or follow @KatieKingCST on Twitter.

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