Drug industry takes heat in legislative hearing over spiraling prices

Drug industry takes heat in legislative hearing over spiraling prices

AARP exec says ‘current prescription drug trends are not sustainable’


Capitol News Illinois

CHICAGO – Illinois lawmakers heard stories Friday about how the rising cost of prescription drugs is endangering the lives of many of the most vulnerable people in society – the poor, the elderly and people with HIV – while advocates for those people laid the blame squarely at the feet of big businesses.

Meanwhile, those businesses – including drug manufacturers, insurance companies, and a little-known industry called pharmacy benefit managers – fought back, proclaiming their innocence and, at times, blaming one another for putting life-saving medicine out of reach for many Americans.

All that played out during a special joint meeting in Chicago of two House committees that are considering legislation to rein in the cost prescription drugs in Illinois, including the possibility of imposing price controls and punishing what some lawmakers consider to be price gouging.

“I think the one lesson we have learned here is that we have a lot of work today,” said Rep. Will Guzzardi, a Chicago Democrat who chairs the Prescription Drug Affordability and Accessibility Committee and is a lead sponsor of some of the legislation. “There are a lot of aspects of this industry that are harming consumers, and we need to step in and intervene to protect folks.”

Guzzardi’s committee, along with the House Insurance Committee, met for three and a half hours to hear consumer advocates, community pharmacists, the insurance industry and drug manufacturers.

John Peller, CEO of the Chicago AIDS Foundation, said the HIV epidemic in Illinois could be ended by 2030, but he said that depends on patients having access to vital drugs, some of which can cost upwards of $40,000. He cited an example of one drug, a single-pill regimen that is actually a combination of four other drugs that were already on the market, that has a list price of $42,000 a year.

“We want to point out that the original development costs have been recovered many times over,” he said. “These are existing drugs that were put into one pill. There certainly were clinical trials that needed to be paid for in order to bring the drug to market, and the price of the drugs was raised by more than the rate of inflation over the years, leading to the high cost.”

Andre Jordan, associate state director for advocacy of AARP Illinois, said elderly people are especially vulnerable to rising prescription drug costs. Those who participate in Medicare’s drug benefit program known as Part D take an average of 4.5 drugs per month, and two-thirds of them have two or more chronic illnesses.

“Current prescription drug trends are not sustainable,” he said. “The current system is simply shifting costs onto patients and taxpayers, while drug companies remain free to set incredibly high prices and increase them pretty much anytime they want. As a result, we Americans continue to pay the highest brand-name drug prices in the world.”

But while consumer advocates laid most of the blame on manufacturers, a group of pharmacists put much of the blame on pharmacy benefit managers, or PBMs.

Those are companies that broker prices on behalf of insurance companies, negotiating contracts that determine how much health plans will reimburse for particular drugs, which drugs they will cover for specific conditions, and how much they will pay pharmacists for dispensing those drugs.

Ben Calcaterra, a pharmacist at Logan Primary Pharmacies in the southern Illinois town of Herrin, said that in many cases he has to take a loss on certain drugs because the negotiated prices are less than the wholesale price he pays to acquire the drugs.

Large retail chain pharmacies, on the other hand, are able to negotiate exclusive contracts with PBMs or, in the alternative, buy directly from manufacturers.

“If these below-cost rates are allowed to continue,” he said, “community pharmacies will remain unsustainable, which will result in increasing areas of pharmacy deserts where patients have no easy route to a local pharmacy.”

But Scott Woods, of the Pharmaceutical Care Management Association, a group that represents PBMs, defended the industry and accused its critics of “mistruths” and “hyperbole.”

“PBMs are the primary advocate for consumers and health plans in the fight to keep prescription drugs accessible and affordable,” he said.

Woods also responded to Cacaterra and other independent pharmacists who have criticized PBMs for forcing them to sell drugs below cost.

“If a PBM sets a maximum allowable cost at a particular rate and the pharmacy is locked into a contract where they are paying above that rate and they are operating at a loss, it’s not the fault of the PBM,” he said. “It’s the fault of the independent pharmacy for getting themselves into a contract in which they cannot get themselves out, and they’re purchasing unwisely.”

Rep. Thaddeus Jones, a Calumet City Democrat who chairs the Insurance Committee, tried to end the meeting on a conciliatory note, insisting that the proposals by lawmakers are not meant as an attack against the pharmaceutical industry, but rather to respond to concerns from constituents.

“Those bills were filed for a reason, to address an issue that our constituents are bringing to us on a daily basis,” he said.

Both committees are expected to continue hearings next week at the Statehouse in Springfield, and the issue of how, or whether, the state tries to impose stricter controls on the pharmaceutical industry will likely continue throughout the session.

Peter Hancock

Peter HancockPeter Hancock

Peter was one of the founding reporters with Capitol News Illinois. A native of the Kansas City area, he has degrees in political science and education from the University of Kansas.

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