Congressional Committees Target Insulin, Rising Drug Prices

Kerry Dooley Young

January 30, 2019

Two Congressional committees started up the year's business by focusing their glare on the ever-rising cost of prescription drugs.

A powerful Senate panel on Tuesday highlighted the high cost of insulin as an example as its leaders began their search for targeted and politically viable steps to lower drug costs in the near term.

Senate Finance Chairman Charles E. Grassley (R-IA) and Sen. Ron Wyden of Oregon, the committee's top Democrat, outlined a broad framework for identifying moves that could lower pharmacy bills for both consumers and the federal government. At an initial hearing on the subject, the two lawmakers agreed on a need to look closely at the operations of pharmacy benefit managers (PBMs) and the tools Medicare has for bargaining with drugmakers.

The senators criticized the chief executives of major pharmaceutical companies for declining to attend the invitations to speak publicly before the finance committee about the prices of medicines. Grassley said he and Wyden intend to again ask them to appear, and they will be more "insistent" in this request. The committee plans to hold a series of hearings on drug prices.

"The days are over when these big companies got a pass," Wyden said.

In a deeply divided Washington, the need to address drug prices represents a rare point of widespread agreement among lawmakers. President Donald Trump has spoken frequently of a need to bring down costs. Speaker Nancy Pelosi (D-CA) this month listed addressing drug prices as a mandate for Congress as she assumed control of the House.

In that chamber, Oversight and Reform Chairman Elijah E. Cummings Jr (D-MD) chose pharmaceutical pricing as the topic for the committee's first hearing, also held Tuesday. That may have been a surprise to those who expected Cummings, a critic of the president, to dig immediately into the operations of the Trump administration and its policies.

"I wanted to focus on one of the biggest problems facing American families across the country — the actions of drug companies that have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs, all while recording windfall profits," said Cummings as he opened the Tuesday House hearing.

Consumers' sticker shock in recent years about the prices of certain drugs, such as the $600 cost for a two-pack of EpiPens, has fueled a call for federal action. Advocates for drugmakers stress that there's been a dramatic slowdown in the nation's tab for medicines.

Total national retail prescription drug spending grew 0.4% in 2017 to $333.4 billion, a deceleration from 2.3% growth in 2016, according to figures released in December by the Centers for Medicare & Medicaid Services. This sluggish growth follows spikes due in part to the introduction in December 2013 of the hepatitis C drug sofosbuvir (Sovaldi) by Gilead Sciences Inc. The initial cost of the drug was about $1000 a pill. National retail prescription drug spending surged 12.4% in 2014 and 8.9% in 2015.

Lawmakers need to consider ways to help Americans gain access to new medicines, which are arriving on the market at "increasingly unsustainable prices," Mark Miller, executive vice president for healthcare at the nonprofit Laura and John Arnold Foundation, told the Senate finance committee.

The cost of chimeric antigen receptor T-cell (CAR‐T) therapy for cancer can easily top $500,000, and drugmakers have discussed pricing new gene therapies at more than $2 million. Limited competition for these medicines will keep their prices high and thus keep them out of reach for people in need, said Miller, who earlier served as executive director of the Medicare Payment Advisory Commission.

"These drugs only work if patients can afford to take them," said Miller in his testimony.

Insulin Prices Draw Scrutiny

On Tuesday, though, the committees focused on the high cost of one of the oldest products of the modern pharmaceutical industry. The House oversight committee called as a witness Antroinette Worsham, a mother who has spoken with the media about the death of her daughter, who she said had been rationing her insulin.

At the Senate Finance Committee, Kathy Sego, a volunteer with the American Diabetes Association, said her son risked his health by deciding to take only a quarter of the insulin he needed in an attempt to spare his family the expense of a full regimen. He lost 20 pounds in 2 weeks before the family intervened, she said.

"Insulin rationing can lead to devastating — even deadly — complications, which I never want my son to experience," Sego said. "I'm heartbroken to know that my son felt he was a financial burden to us."

Grassley said he intended to uncover for the public the reasons why the cost of insulin is so high, an aim in which his Democratic partner on the Senate Finance Committee concurs. The lifesaving medicine for people with diabetes was introduced in the 1920s. Biotech versions of the drug, which earlier was derived from animal pancreas glands, have been sold since the 1980s.

"There has been no 'ah-ha' moment in a lab to explain why the price of Eli Lilly's main insulin drug, Humalog, went from $21 a vial in 1996 to its current list price of $275," Wyden said, noting that this marks a thirteen-fold increase.

"Humalog isn't 13 times as effective as it used to be," Wyden said. "A vial doesn't last 13 times longer than it did in 1996."

Consumers often have a hard time finding out how much a medicine costs, owing to the complex system of rebates and other financial means used by insurers and PBMs. In speaking with reporters after the hearing, Grassley said he's committed to making drug pricing more transparent.

"There's too much secrecy in this business," Grassley said.

The Senate Finance Committee has jurisdiction over Medicare and Medicaid. The committee has significant responsibility for overseeing the finances of these two giant federal health programs. If Democrats and Republicans on the committee succeed in changing aspects of federal drug purchasing, their work might have a broad impact on pharmaceutical costs.

Several hours after the hearing, two members of the finance committee unveiled a bill for which health policy specialists have been waiting. Sen. Bill Cassidy, MD (R-LA), and Mark Warner (D-VA) are working together on a bill intended to pave the way for the creation of value-based arrangements, which would peg pricing for prescription drugs and medical devices to the results they deliver for patients.

Medicare Part D

The leadership provided by Grassley and Wyden in the Senate Finance Committee may drive some notable changes in federal policies on drug pricing, John Rother, chief executive of the National Coalition on Health Care, told Medscape Medical News. His organization represents about 80 groups, including medical societies, businesses, unions, faith-based associations, pension funds, health funds, and insurers.

"No one is saying there is a silver bullet here that can fix it all in one fell swoop," said Rother, who earlier served as AARP's executive vice president for policy. "But there seemed to be a common base of ideas that both sides were interested in."

At the hearing, several members of the finance committee spoke of a need to reconsider how Medicare's Part D pharmacy program negotiates drug prices.

Grassley and Wyden were among the senators who supported the creation of the Part D program in 2005 over the objections of colleagues. Many Democrats then rejected the GOP proposal, although they also wanted Medicare to buy drugs for senior citizens. Democratic Party members split about whether it was better to proceed with the Republican plan to use insurers to administer the drug benefit or to wait for a plan that would allow direct Medicare negotiations. Wyden was among the Democrats who voted for the bill.

"I've still got the scars on my back from that," Wyden said at the Tuesday hearing, referring to the 2005 creation of Part D. "And now clearly reform is needed."

Wyden then asked the panel of expert witnesses at the hearing about a safety-net feature built into Part D for insurers.

There's been growing criticism of a reinsurance program in which Medicare covers about 80% of liability for so-called catastrophic spending in Part D. The Part D plans are responsible for 15% of this catastrophic spending, with patients paying 5% out of pocket. Earlier this month, CMS said it intends to test a program to address the "perverse incentives" created by this system, which benefits insurers if their customers' drug spending reaches the catastrophic level.

From 2008 to 2017, the tab for this reinsurance almost quadrupled, from $9.4 billion to $37.4 billion, according to Medicare's board of trustees. That far outpaced growth in Part D in general, for which costs didn't quite double in the same period. The total tab for Part D rose from $53.9 billion in 2008 to $93.9 billion in 2017.

This safety-net mechanism originally was intended to shield insurers during the start-up of the Part D program, a witness told the finance comittee.

The safety net for insurers "was put in place so that the plans would have confidence when they cautiously stepped in" to the Part D program in 2006, said Peter B. Bach, MD, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center, New York City. "They have now mastered the structure, and so we should probably put that tail-end risk back on them."

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