Rising Generic Drug Prices Under Congressional Investigation

October 29, 2014
Eileen Oldfield Associate Editor

Members of Congress have launched an investigation into the increasing generic drug prices that are plaguing both patients and pharmacists.

United States Senator Bernie Sanders (I-Vermont) and Representative Elijah Cummings (D-Maryland) have launched an investigation into the increasing generic drug prices that are plaguing both patients and pharmacists.

Sen. Sanders, who is head of the Senate health care subcommittee, and Rep. Cummings, the ranking member of the House oversight committee, sent letters to 14 generic drug manufacturers, outlining the price increases for both common medications and treatments for life-threatening conditions.

“It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs,” Sen. Sanders said in a press release. “Generic drugs were meant to help make medications affordable for the millions of Americans who rely on prescription to manage their health needs. We’ve got to get to the bottom of these enormous price increases.”

The National Community Pharmacists Association (NCPA) in January requested a congressional hearing with the Senate Health Education Labor and Pensions Committee and its House of Representatives counterpart the Energy and Commerce Committee regarding high generic drug acquisition costs. The letter noted the dramatic increases in generic drug acquisition costs, and asked Congress to examine the factors leading to acquisition cost spikes.

NCPA began hearing about generic drug acquisition price increases approximately 1 year ago, said John Norton, the organization’s director of public relations, in an email to Pharmacy Times.

“We appreciate the efforts of Sen. Sanders and Rep. Cummings, and we are supporting their work in any way we can” he said. “We are hopeful for a hearing on the subject. We appreciate that Medicare is implementing a policy addressing this issue for the 2016 plan year, and we continue to support HR 4437 (The Generic Drug Pricing Transparency Act) to both codify and expand on what Medicare is doing.”

Sen. Sanders and Rep. Cummings cited price data from the Healthcare Supply Chain Association, a private health care trade organization for group purchasing organizations, in their letters. The data included an 8281% increase in the average market price of doxycycline hyclate 100 mg tablets, a 4014% increase in albuterol sulfate 2 mg tablets, and a 2728% increase in glycopyrrolate 20 ml vials.

“Generic drugs have historically resulted in huge savings for consumers and for taxpayers,” Rep. Cummings said in a press release. “However, these outrageous recent cost increases are now preventing patients from getting the drugs they need, and they merit further investigation to better understand what factors are driving these price spikes.”

In response to a US Centers for Medicare and Medicaid Services (CMS) report on direct and indirect remuneration (DIR) reporting and pharmacy price concessions, NCPA commented on pharmacy benefit manager (PBM) reporting of Medicare Part D price concessions, Norton said.

“NCPA strongly supports CMS’ revised definition of ‘negotiated prices’ in the Medicare Part D program, as we agree with CMS that some Part D sponsors have manipulated the DIR mechanism by reporting many pharmacy price concessions as DIR under the guise that these price concessions could not be determined at point of sale,” Norton said. “This can lead to CMS and the plan’s enrollees paying higher monthly premiums and cost-sharing.”

The root of the problem lies in the various methods PBMs use to define pharmacy price concessions, he added. The methods are often imposed by the PBM, according to a manual or contract additions applied unilaterally to pharmacies.

“If such amounts are not truly payments for services, but price concessions, Medicare Part D plans should be deducting such amounts at the point of sale, resulting in lower plan costs, and beneficiary cost-sharing, regardless of the term a PBM gives to such a concession,” Norton said.