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House Oversight Committee targets a dozen drugmakers in pricing probe

True to his word, Rep. Elijah Cummings, D-Md., chairman of the House Oversight Committee, opened an investigation into the pricing practices of a dozen drugmakers involving medicines from multiple classes.

The companies targeted in the probe are AbbVie Inc., Amgen Inc., AstraZeneca PLC, Celgene Corp., Eli Lilly and Co., Johnson & Johnson, Mallinckrodt Public Ltd. Co., Novartis AG, Novo Nordisk A/S, Pfizer Inc., Sanofi and Teva Pharmaceutical Industries Ltd.

Following the November 2018 midterm elections, when Democrats reclaimed the House, Cummings vowed to take on drugmakers as soon as he got the Oversight gavel in hand — giving him subpoena power — saying he planned to stay "laser focused" on the matter. He revealed last week he would hold a hearing Jan. 29 devoted to drug prices — the first of what he said would be several sessions in the coming weeks.

"The American people want action, the Maryland lawmaker said during a Jan. 10 briefing, where he and a group of Democratic colleagues and Sen. Bernie Sanders, I-Vt., unveiled a package of three bills aimed at lowering Americans' costs for prescription medicines.

At that event, Cummings noted he has been investigating drug prices for nearly a decade.

In a Jan. 14 statement, the committee chief said his panel planned to look into why drugmakers have aggressively and substantially raised their costs for consumers in recent years on existing products and are setting higher launch prices for new medicines while recording windfall profits.

"The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds and what steps can be taken to reduce prescription drug prices," Cummings said.

While research and development efforts on groundbreaking medications have made "immeasurable contributions" to Americans' health, drugmakers' ongoing escalation of prices "is unsustainable," he added.

Medicare bears the brunt

Cummings noted that the Centers for Medicare and Medicaid Services projected that spending on prescription medicines would increase more rapidly than for any other healthcare sector over the next decade.

"The federal government bears much of the financial burden of escalating drug prices," through its Medicare Part D program, which provides coverage for medicines to about 43 million seniors and disabled Americans, Cummings said.

For this year alone, the government is expected to spend $99 billion for medicines under Medicare Part D.

The 20 most expensive drugs to Medicare Part D in 2016 accounted for about $37.7 billion in spending. The 10 most expensive brand-name drugs accounted for $15.6 billion of the spending in catastrophic coverage phase of the Medicare Part D benefit in 2015, according to the Department of Health and Human Services' Office of Inspector General.

In addition, the inspector general has found that Part D payments for brand-name drugs increased by 62% from 2011 to 2015 — after taking into account manufacturer rebates — even though the number of prescriptions fell by 17%.

About 94% of widely used brand-name medicines on the market between 2005 and 2017 more than doubled in price during that time, and the average price increase in 2017 was 8.4% — four times the rate of inflation — according to an analysis conducted by AARP.

Cummings also cited a recent Associated Press analysis, which found that more than 4,400 brand-name drugs increased in price in the first seven months of 2018 alone, versus 46 price decreases.

In letters to the 12 biopharmaceutical manufacturers, Cummings demanded detailed information and documents about the companies' pricing practices, including information and communications on increases, investments in research and development and corporate strategies to preserve market share and pricing power.

The letters focused on drugs that have been among the costliest to the Medicare Part D program and beneficiaries or had the largest price increases over five years, Cummings added.