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Oversight Committee Launches Sweeping Drug Price Investigation

Jan 14, 2019
Press Release
Chairman Cummings Sends Detailed Requests to 12 Pharmaceutical Companies

Washington, D.C. (Jan. 14, 2019)—Today, Rep. Elijah E. Cummings, the Chairman of the Committee on Oversight and Reform, launched one of the most wide-ranging investigations in decades into the prescription drug industry’s pricing practices.

“The Committee on Oversight and Reform is investigating the actions of drug companies in raising prescription drug prices in the United States, as well as the effects of these actions on federal and state budgets and on American families,” Cummings wrote.  “For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits.  The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices.”

“Research and development efforts on groundbreaking medications have made immeasurable contributions to the health of Americans, including new treatments and cures for diseases that have affected people for centuries,” Cummings continued.  “But the ongoing escalation of prices by drug companies is unsustainable.” 

Cummings sent letters to 12 drug companies seeking detailed information and documents about the companies’ pricing practices.  The letters seek information and communications on price increases, investments in research and development, and corporate strategies to preserve market share and pricing power.  The letters are the first step in the Committee’s comprehensive review of pricing practices.  The Committee will hold its first of several hearings in the coming weeks to hear from experts, as well as patients affected by rising drug prices.

The Centers for Medicare and Medicaid Services projects that spending on prescription drugs will increase more rapidly than spending on any other health care sector over the next ten years.  The federal government bears much of the financial burden of escalating drug prices through Medicare Part D, which provides drug coverage to approximately 43 million people.  The government is projected to spend $99 billion on Medicare Part D in 2019.  In 2016, the 20 most expensive drugs to Medicare Part D accounted for roughly $37.7 billion in spending.

A review by the Inspector General of the Department of Health and Human Services found that ten of the most expensive brand-name drugs accounted for $15.6 billion of spending in the catastrophic coverage phase of the Medicare Part D benefit in 2015.  The Inspector General has also found that Part D payments for brand-name drugs increased by 62% from 2011 to 2015—after taking into account manufacturer rebates—even though the number of prescriptions fell by 17%. 

Approximately 94% of widely-used brand-name drugs on the market between 2005 and 2017 more than doubled in price during that time, and the average price increase in 2017 was 8.4%—four times the rate of inflation—according to an analysis conducted by AARP.  A recent Associated Press analysis found that more than 4,400 brand-name drugs increased in price in the first seven months of 2018 alone, compared to 46 price decreases.

These price increases are negatively affecting patients, including those on Medicare.  The percentage of Medicare Part D beneficiaries who paid at least $2,000 out-of-pocket for their drugs nearly doubled from 2011 to 2015.  A survey conducted by the Kaiser Family Foundation last year found that one in five Americans had not filled a prescription due to costs.

In today’s letters, Cummings is focusing on drugs that are among the costliest to Medicare Part D, among the costliest per beneficiary, or had the largest price increases over a five-year period.

Click here for a list of the companies and drugs that are the subject of today’s letters.

 

116th Congress