Drug Price Transparency

During a Senate Finance Committee hearing, I questioned a panel of expert witnesses on drug pricing in America. Excerpts from my line of questioning are below:

Can anybody on the panel explain to me why we have a general prohibition against kickbacks, call them ‘rebates,’ under the Social Security Act, but we nevertheless allow it for prescription drug pricing? What’s the sound public policy reason for excluding prescription drug pricing from the anti-kickback rule under federal law?

I thought I was the only one who didn’t understand the wisdom of that. Well, it’s obviously not a transparent arrangement, and it does produce upward pressure on drug prices and obviously the negotiation between the PBM and pharma, in terms of actually what the net cost is, is not transparent nor does it deliver to the consumer, is it? Dr. Miller? Dr. Bach?

Well, explain this to me. I thought the reason why we granted patents in this country to develop new drugs and new things, the reason why we gave people exclusivity when it comes to selling it, is based on the sunk costs they put in research and development so they could recoup that back in the generic drug space. Once that patent expires then the benefit flows to where it’s no longer exclusive and then that means that, for example, the blood pressure medication I take, I think I pay $9 for a three month supply. It’s very inexpensive. But those same benefits do not flow in the case of biosimilars, like insulin. But it strikes me as bizarre that after 100 years after insulin started to be used to treat diabetes, that we still have a system which guarantees an inflated price, even though the cost of the research and development, which I thought was the rationale in the first place, is inapplicable. So what am I missing, Dr. Bach, Dr. Miller?


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