Developments in the Prescription Drug Market: Oversight

Full House Committee on Oversight and Government Reform
Full House Committee on Oversight and Government Reform
Hearing Date: February 4, 2016 9:00 am 2154 Rayburn House Office Building

0204 Prescription Drugs

TAKEAWAYS:

  • Former CEO of Turing Pharmaceuticals, Martin Shkreli, refused to answer questions from Committee Members, opting instead to invoke his Fifth Amendment right.
  • The Food and Drug Administration’s (FDA) lengthy review process for generic drug applications is causing a massive backlog of more than 3,700 applications.
  • In the absence of generic competition, pharmaceutical companies like Valeant Pharmaceuticals and Turing Pharmaceuticals to increase drug-manufacturing prices.
  • Current Turing CEO Nancy Retzlaff testified that the company is losing money, yet confirmed the company spends on lavish items.
  • In the aftermath of the Patient Protection and Affordable Care Act (PPACA) the cost of prescription drugs continues to drain Americans’ pocketbooks.

PURPOSE:

  • To discuss methods and reasoning behind recent drug price increases.
  • To discuss the role of pharmacy benefit managers in negotiating drug prices, and address concerns about the lack of transparency in pricing contracts. 
  • To discuss impediments to a timely review and approval of generic drug applications, and how the government can improve the efficiency and competitiveness in the market. 

BACKGROUND:

  • The wholesale price for thirty of the top-selling U.S. drugs increased 76 percent between 2010 and 2014, which represents eight times the general inflation rate.
  • Pharmaceutical companies cite, among other things, shareholder accountability and high research and development costs as reasons for price increases.
  • Industry analysts have cited “declining market competition” as one of the factors driving recent drug price increases.  
  • Generic drugs, which can cost eighty to eighty-five percent less than their brand equivalents, historically have played an important role in the health care marketplace by offering a lower-cost alternative to brand drugs.
  • However, the number of generic drug applications submitted to the U.S. Food and Drug Administration (FDA) is outpacing approved applications by a three to one margin with approximately 3,800 applications still awaiting action.  
  • Under the Generic Drug User Fee Amendments of 2012, the FDA will receive approximately $1.5 billion over five years from industry fees to speed the public’s access to safe and effective generic drugs.

KEY VIDEOS:

Chairman Jason Chaffetz (R-UT): “Did you spend money on fireworks?”
Ms. Retzlaff: “Yes”
Chaffetz: “Did you spend money on a cigar roller for the yacht night, $800?”
Ms. Retzlaff: “Yes”
Chaffetz: “Ok, so don’t tell me that you’re losing money. Don’t try to pretend and tell us that this $750 is justified, when you got a woman whose got AIDS. And what is she supposed to do, is she supposed to tweet Martin and try to get that for a penny?”

Rep. Jody Hice (R-GA): “We are requesting (that) something be done. And that’s the problem. You have these targeted dates but … the backlog is not getting any better. It is getting worse.”

Rep. Blake Farenthold (R-TX): “You’re saying you’re getting down to 10 and 15 months, but you’ve basically created a 10 and 15 month monopoly for anybody who’s a single source of a generic drug who do that kind of price increase and name their price for that drug.”

Witnesses and testimonies

Name Title Organization Panel Document
Dr. Janet Woodcock Director, Center for Drug Evaluation and Research U.S. Food and Drug Administration Document
Mr. Howard B. Schiller Interim Chief Executive Officer Valeant Pharmaceuticals International, Inc. Document
Mr. Martin Shkreli Former Chief Executive Officer Turing Pharmaceuticals LLC
Ms. Nancy Retzlaff Chief Commercial Officer Turing Pharmaceuticals LLC Document
Mr. Mark Merritt President and Chief Executive Officer Pharmaceutical Care Management Association Document

Related Documents

Name Document
Turing Pharmaceuticals operating costs Document
Turing Pharmaceuticals salary sncreases Document
Turing Pharmaceuticals plans to increase prices Document