Expert Witness and Lawmakers Highlight Root Cause of High Rx Prices: Big Pharma’s Anti-Competitive Tactics

Hearing Confirms Big Drug Companies Would Benefit from Misguided Proposals
Targeting Pharmacy Benefits

This week, the U.S. House Committee on Oversight and Accountability held a hearing where lawmakers and an expert witness, Frederick Isasi, JD, MPH, executive director of Families USA, who last week was a Majority witness at the House Ways and Means Health Subcommittee hearing on consolidated markets, highlighted the root cause of high prescription drug prices: big drug companies’ anti-competitive tactics designed to keep more affordable alternatives from entering the market.

Ranking Member Jamie Raskin (D-MD), explained that big drug companies are responsible for setting high prescription drug prices:

“Drug companies are ultimately responsible for setting high prices and in fact have poured millions of dollars into TV and social media ads as well as lobbying to deflect attention away from their own role in setting high drug prices by shining the spotlight on PBMs.”

Expert witness Frederick Isasi, JD, MPH, echoed that Big Pharma sets high prices so they can pocket large profits, and that pharmacy benefit companies provide the only real check on their otherwise unlimited pricing power by negotiating directly with big drug companies:

“The vast majority of money that is flowing through the system is landing in the pockets of Big Pharma, and we’ve got to say that. And the reason that we’ve got PBMs is because they are negotiating a better rate…”

“This is about one simple fact: Big Pharma is charging way too much money for their drugs, and we’re trying to get a better price. And now, what’s happened is that PBMs, which are just middlemen…They make most of their money for name-brand drugs, and they get 12 times more in profit, Big Pharma does than the PBM. PBM gets two percent, Big Pharma gets 24 percent. So, at the end of the day, we cannot hide the fact that underneath all of this, it’s because Big Pharma is price gouging us, and we’re trying to come up with some mechanism like a PBM to negotiate a fair price. 

“…The reason PBMs exist is that we lack the ability to fairly negotiate with Big Pharma. So, we came up with PBMs as a solution. I want to clarify that the idea of repealing the rebate rule was actually proposed under the Trump administration, and the Congressional Budget Office (CBO) scored it to save $170 billion in costs because PBMs are actually saving us money.”

Representative Eric Burlison (R-MO) asked Mr. Isasi who would benefit from eliminating pharmacy benefit companies, “If we eliminated PBMs today, who would benefit…?”

Mr. Isasi answered, “No question, drug makers would benefit.”

Representative Burlison (R-MO) then highlighted how targeting pharmacy benefit companies plays directly into the big drug company agenda to avoid taking accountability:

“I mean, one way you could say this meeting was brought to you by Pfizer, because if there’s one company that will make money, it’s pharmaceuticals because no one will be there to negotiate with them.”

Legislation targeting pharmacy benefit companies will increase prescription drug costs for patients and families and eliminate the one check against big drug companies, who are solely responsible for setting high prices to boost their own profits.

Lawmakers should instead focus on strengthening competition in the marketplace – the most effective way to lower prescription drug costs.

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Read PCMA’s statement ahead of the hearing HERE.

Learn more about public policy solutions that would promote competition in the prescription drug market and effectively lower prices for patients HERE.

Learn more about the critical role of pharmacy benefit companies and how Big Pharma’s egregious practices are the root cause of high drug prices HERE.