Some U.S. pharmaceutical companies have used a portion of revenue to suppress competition and to extend monopolies they already had for certain drugs, according to a report earlier this month from the U.S. House Committee on Oversight and Reform.
Unfortunately, the report did not get widespread coverage, although Diane Bartz at Reuters, Ed Silverman at Stat News and Kerry Dooley Young at WebMD all had excellent articles on the Democrats’ 269-page report, Drug Pricing Investigation Majority Staff Report, Committee on Oversight and Reform U.S. House of Representatives, December 2021. The committee focused on 12 drugs from 10 pharmaceutical companies, Bartz noted.
In her article, Drugmakers aim big price hikes at U.S. patients, congressional report finds, Bartz led with the fact that drugmakers have used the U.S. market to boost profits from old medicines and that three companies (Lilly, Novo Nordisk and Sanofi) control about 90% of the insulin market.
Silverman also highlighted how the companies have manipulated insulin prices in his article, ‘All I want for Christmas’ is higher prices: Congressional report accuses pharma of manipulating Americans for profit. Silverman led with an anecdote about how one pharma company executive wanted a competitor to raise insulin prices around Christmas 2015 so that his company could follow that increase with its own. “A price hike by both companies would have been a fine gift for a drugmaker that practiced shadow pricing — or simultaneous price hikes,” he wrote. Such an increase would give both companies leverage when negotiating with pharmacy benefit managers and health insurers, he explained. “Pharmaceutical industry critics argue such moves suggest collusion,” he added.
AHCJ’s patient safety core topic leader Kerry Dooley Young also covered the insulin angle in her article for WebMD, noting that from 2011 to 2017, Medicare could have saved more than $16.7 billion on insulin if it received the same discounts that other federal health programs get from negotiating with drug companies.
The Bartz, Silverman and Young articles illustrate why the committee’s report deserves more in-depth coverage. Frankly, the report reads almost like an editor’s assignment sheet for anyone covering drug prices, including the fact that the currently stalled Build Back Better legislation in Congress contains significant drug-pricing reforms.
In an article last week, Dan Diamond covered this part of the bill for The Washington Post, writing that the rising price of insulin has forced some patients to choose between filling their insulin prescriptions and paying for food, housing or other essentials.
In a letter accompanying the report, Committee Chairwoman Carolyn B. Maloney (D-N.Y.) explained that while drugmakers cut prices in other countries, they exploited weaknesses in the U.S. market to raise prices sharply and use anti-competitive behavior. After almost three years of investigation, the committee found that the 10 companies followed common practices even though their products were for different markets, including medications for patients with cancer, chronic conditions and rare diseases.
Maloney’s top three follow-up areas for journalists to explore
- Drug companies raise prices when they delay or block competitors from launching similar products, and they have done so to boost revenue that in some cases were tied to higher executive pay, she wrote.
- Pharma companies manipulated the Food and Drug Administration’s patent system to extend market monopolies for longer than lawmakers envisioned when the patent system was established, she added. Business columnist Joe Nocera explained such manipulative behavior in this 2017 column for Bloomberg View.
- The 10 companies used anticompetitive strategies to suppress generic competition, Maloney added.
Many pharmaceutical companies also offer patient assistance programs and donations to third-party organizations to help patients afford expensive drugs, she wrote. But those programs often are designed to gain positive public attention, increase sales and raise revenue, she added.
Another topic to cover: the perverse incentives built into the U.S. pharmaceutical market that allow companies to raise prices “without limitation,” she wrote. In other countries, price controls limit what consumers pay while price increases in the United States have made prescription drugs increasingly unaffordable for Americans, she added.
Also, she noted, high drug prices have become a significant drain on federal health care spending. “The committee’s analysis found that from 2014 to 2018, taxpayers lost $25 billion in savings on just seven drugs because Medicare could not negotiate to lower prices,” Maloney wrote.
More resources for reporters
Check these two video clips related to the committee’s report.
- A C-SPAN video
- The committee’s press conference
