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Hassan Joins Progressive Senators In Introducing Legislation To Bring Down Prescription Drug Prices

Proposal Improves Upon the Affordable Care Act By
Addressing Skyrocketing Drug Prices

WASHINGTON – Yesterday, Senator Maggie Hassan (D-NH) joined Senator Al Franken (D-MN) and others in launching a major push to improve upon the Affordable Care Act (ACA) by bringing down the skyrocketing price of prescription drugs, one of the main reasons why health care costs for seniors and families are rising.

The Improving Access to Affordable Prescription Drugs Act would help ensure that drug companies put patients before profits and bring much-needed relief to families and seniors, including many who have had to make the impossible choice between paying for a life-saving drug and putting food on the table.

“It is long past time for Congress to put patients first by coming together and acting to lower the cost of prescription drugs,” said Senator Hassan. “This major piece of legislation helps ensure that seniors and families can afford the medication they need through common-sense steps including cracking down on bad actors who hike the cost of prescription drugs that have been on the market for years or who play games to prevent competition. I will continue working with anyone who’s serious about addressing the rising costs of prescription drugs and ensuring that all Americans can afford critical care.” 

The landmark proposal, which the Senators said they want to see included in upcoming legislative debates, seeks to tackle prescription drug costs by increasing transparency and accountability, boosting access and affordability of key drugs, spurring innovation, and increasing choice and competition.  

The Senators were joined in introducing this legislative package, which is supported by a wide range of organizations and patient advocacy groups, by Senators Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI), Sherrod Brown (D-OH), Amy Klobuchar (D-MN), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Jack Reed (D-RI), Kirsten Gillibrand (D-NY), Dick Durbin (D-IL), Chris Van Hollen (D-MD), Jeff Merkley (OR), Tom Udall (D-NM), Richard Blumenthal (D-CT), and Cory Booker (D-NJ).

You can read more about the legislation by clicking here or reading below:

The Senators’ legislation is supported by:

  • The American Medical Student Association (AMSA)
  • AFSCME
  • Housing Works
  • MoveOn
  • National Committee to Preserve Social Security & Medicare
  • National Physicians Alliance
  • Other98
  • PFAM: People of Faith for Access to Medicines
  • Public Citizen
  • Social Security Works
  • Universities Allied for Essential Medicines (UAEM)
  • AFT
  • Doctors for America
  • Center for Medicare Advocacy
  • Alliance for Retired Americans

Improving Access to Affordable Prescription Drugs Act

Title I: Transparency

Section 101: Drug manufacturer reporting.

To better understand how research and development costs, manufacturing and marketing costs, acquisitions, federal investments, revenues and sales, and other factors influence drug prices, this section requires drug manufacturers to disclose this information, by product, to the Secretary of the Department of Health and Human Services (HHS), who, in turn, will make it publicly available in a searchable format.

Section 102: Determining the public and private benefit of copayment coupons and other patient assistance programs.

To better understand how patient assistance programs affect drug prices and the extent to which drug makers are using independent charity assistance programs to drive up profits, this section requires independent charity assistance programs to disclose to the IRS the total amount of patient assistance provided to patients who are prescribed drugs manufactured by any contributor to the independent charity assistance program. It also requires a GAO study on the impact of patient assistance programs on prescription drug pricing and expenditures. 

Title II: Access and Affordability

Section 201: Negotiating fair prices for Medicare prescription drugs.

Medicare is one of the largest purchasers of prescription drugs in the country but, unlike Medicaid and the Department of Veterans Affairs (VA), it is not allowed to leverage its purchasing power to negotiate lower drug prices and bring down costs. This section would allow the Secretary of HHS to negotiate with drug companies to lower prescription drug prices, and directs the Secretary to prioritize negotiations on specialty and other high-priced drugs.

Section 202: Prescription drug price spikes.

Prescription drugs are priced in the United States according to whatever the market will bear and are sometimes subject to drastic and frequent price increases without apparent justification. This makes drugs increasingly unaffordable and creates significant uncertainty for patients’ and insurers’ budgets. This section requires the HHS Office of the Inspector General (HHS OIG) to monitor changes in drug prices and take steps to prevent drug manufacturers from engaging in price gouging. 

Section 203: Acceleration of the closing of the Medicare Part D coverage gap.

This section closes the Medicare Part D prescription coverage gap in 2018, two years earlier than under current law, providing faster financial relief to seniors, and requires drug manufacturers to pay a larger share of the costs during the coverage gap.  

Section 204: Importing affordable and safe drugs.

This section allows wholesalers, licensed U.S. pharmacies, and individuals to import qualifying prescription drugs manufactured at FDA-inspected facilities from licensed Canadian sellers and, after two years, from OECD countries that meet standards comparable to U.S. standards.

Section 205: Requiring drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals.

This section restores prescription drug rebates for seniors who are dually eligible for Medicare and Medicaid and extends these rebates to other Medicare patients in Medicare low-income-subsidy plans.

Section 206: Cap on prescription drug cost-sharing.

For plan years beginning in 2019 and later, this section caps prescription drug cost sharing at $250 per month for individuals and $500 a month for families enrolled in Qualified Health Plans and employer-based plans.

 

Title III: Innovation

Section 301: Prize fund for new and more effective treatments of bacterial infections.

This section creates a $2 billion prize fund at the National Institutes of Health to fund entities that develop superior antibiotics that treat serious and life-threatening bacterial infections and to fund research that advances such treatments and is made publicly available. In order to receive prize funds, recipients must commit to offering their products at a reasonable price, share clinical data, and take steps to promote antibiotic stewardship. 

Section 302: Public funding for clinical trials.

This section creates a Center for Clinical Research within the NIH to conduct all stages of clinical trials on drugs that may address an existing or emerging health need. 

Section 303: Rewarding innovative drug development.

This section amends various exclusivity periods awarded by the FDA to brand-name pharmaceutical companies in an effort to accelerate competition in the generic and biologics market. First, the bill modifies the New Chemical Entity (NCE) exclusivity period to allow FDA to accept a generic drug application for the branded product after three years rather than five. Second, this section would add in a requirement that products awarded the 3-year New Clinical Investigation Exclusivity must show significant clinical benefit over existing therapies manufactured by the applicant in the 5-year period preceding the submission of the application. Third, this section reduces the biological product exclusivity from 12 years to 7 years. 

Section 304: Improving program integrity.

This section would terminate any remaining market exclusivity periods on any product found to be in violation of criminal or civil law through a federal or state fraud conviction or settlement in which the company admits fault.

 

Title IV: Choice and Competition

Section 401: Preserving access to affordable generics.

This legislation would make it illegal for brand-name and generic drug manufacturers to enter into anti-competitive agreements in which the brand-name drug manufacturer pays the generic manufacturer to keep more affordable generic equivalents off the market. 

Section 402 and 403: 180-Day exclusivity period amendments regarding first applicant status and agreements to defer commercial marketing.

This section enables FDA to take away the 180-day generic drug exclusivity period from any generic company that enters into anti-competitive pay-for-delay settlements with brand-name drug manufacturers. 

Section 404: Increasing generic drug competition.

This section introduces new reporting requirements and financial incentives to promote and sustain competitive generic markets. 

Section 405: Disallowance of deduction for advertising for prescription drugs.

This section eliminates the tax breaks drug companies receive from the federal government for expenses related to direct-to-consumer advertising.

Section 406: Product hopping.

This section establishes a definition for the term “product hopping” and instructs the FTC to submit a report to Congress on the extent to which companies engage in these anti-competitive practices and their effects on company profits, consumer access, physician prescribing behavior, and broader economic impacts.

Pfizer Jacks Up Drug Costs, Pays Billions to Stockholders

Prescription Prices Ver5

Photo by Chris Potter via Flickr

Ever wonder why prescription drug costs are so high? Take a few minutes and read Bill Lazonick’s piece on Pfizer.

From January 2001 through September 2015, Pfizer paid out [to stockholders] $95.5 billion in buybacks and $87.1 billion in dividends.

That’s $182.6 billion paid to stockholders… compared to $37.1 billion paid in corporate taxes over the same time frame. Do the math. That’s almost five times more money paid to stockholders than paid in taxes.

Now, stop and think about this. Why are stockholders getting all that money? When shares are bought and sold on the stock exchange, none of that money goes back to the corporation. Instead, the money goes to the previous owner of the stock – who may have owned that stock for less than a second. (Read more about “high frequency trading” here.)

And yet, most corporations pay lots of money to their stockholders. For what? Passing stock from one owner to another isn’t investing in the corporation’s future. So far in 2015, Pfizer has paid more than twice as much to stockholders as it has invested in R&D.

Why are stockholders getting all that money?

— — — —

tieby Unsplash via PixabayPaying money to stockholders benefits corporate executives who are “paid for performance.” (How this works, using Verizon as a case study, is a previous NHLN post.) In the case of Pfizer’s CEO, “75% of his long-term equity awards are earned based on relative and absolute total shareholder return.” In other words, the CEO’s compensation depends on Pfizer paying money to shareholders. If stockholders don’t get enough money, the CEO doesn’t get that compensation. And it’s not just the CEO. All of Pfizer’s top corporate executives are paid according to whether they meet “shareholder return” targets.

Back to Bill Lazonick’s piece:

In 2014, [Ian C.] Read as [Pfizer] CEO had total direct compensation of $22.6 million, of which 27 percent came from exercising stock options and 50 percent from the vesting of stock awards. The other four highest-paid executives named on Pfizer’s 2015 proxy statement averaged $8.0 million, with 24 percent from stock options and 41 percent from stock awards.

Remember, a good chunk of that compensation was based on the amount of money paid to stockholders. Which probably explains why Pfizer is paying so much more to stockholders than it’s spending on R&D.

— — — —

dollar by TBIT via PixabayWhere does all that money come from, anyway?

From Bloomberg:

Pfizer Inc., the nation’s biggest drugmaker, has raised prices on 133 of its brand-name products in the U.S. this year, according to research from UBS, more than three-quarters of which added up to hikes of 10 percent or more. … In a note Friday, analysts at Morgan Stanley said Pfizer’s net prices grew 11 percent a year on average from 2012 to 2014.

The Wall Street Journal documented Pfizer’s three-year market research campaign to decide the price of a new breast cancer drug.

“[I]ts process yielded a price that bore little relation to the drug industry’s oft-cited justification for its prices, the cost of research and development. … Staff members put together a chart estimating the revenue and prescription numbers at various prices… The chart showed a 25% drop in doctors’ willingness to prescribe the new drug if it cost more than $10,000 a month.”

Two years ago, AARP investigated the pricing strategy for another Pfizer drug, with an expiring patent:

[T]he manufacturer of the popular anti-cholesterol drug Lipitor employed an unusually aggressive strategy — including a pay-for-delay agreement, a coupon program, and a substantial price increase — to try to maintain revenue and market share after Lipitor’s patent expired. … Several major U.S. retailers have filed lawsuits against Pfizer and Ranbaxy that accuse them of violating antitrust laws by striking a deal that kept generic versions of Lipitor off the market… Pfizer’s chief executive reported that they maintained three times more market share than what is traditionally seen when blockbusters lose patent protection, “add(ing) hundreds of millions of dollars of profitability to the company.”

And a bunch of Pfizer’s profits come from government spending. There isn’t a lot of available research into government spending on pharmaceuticals, but what I’ve found is enlightening. As of 2010, Pfizer’s Lipitor – in varying strengths – represented three of the top-20 drugs prescribed under both Medicare and Department of Defense health programs. As of 2003, Medicaid was spending almost $650 million a year just on Lipitor.

That’s a lot of taxpayer money going to Pfizer.  While the corporation is paying twice as much to shareholders as it’s spending on R&D. While it’s paying five times as much to shareholders as it’s spending on corporate taxes. While Pfizer is trying to use the US corporate tax rate to justify off-shoring profits through a merger with Allergan.

While Pfizer’s CEO is receiving millions in compensation based on the amount of money the corporation pays to stockholders.

— — — —

hands by Gaertringen via PixabayAnd where else does that money come from?

If you have family or friends on Medicare, you probably know that the price of prescription drug coverage is going up significantly next year – even though there will be no Social Security COLA.

If you’re a State of New Hampshire retiree, you know that your cost of drug coverage is going up significantly next year – even though there hasn’t been a retirement COLA for the past six years.

The billions being paid to Pfizer stockholders are coming out of a lot of pockets… including the pockets of people who are spending their “golden years” choosing between medicine and food.

One more time: why are stockholders getting all that money? What have they done to deserve it?

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