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Drug price transparency prompts fight among Democrats

Dispute is partly a turf battle between two committees who want to produce legislation on a high-profile issue

Consumer advocates clearly prefer a measure offered in the the Energy and Commerce Committee by Rep. Jan Schakowsky, D-Ill. (Bill Clark/CQ Roll Call file photo)
Consumer advocates clearly prefer a measure offered in the the Energy and Commerce Committee by Rep. Jan Schakowsky, D-Ill. (Bill Clark/CQ Roll Call file photo)

A dispute among Democrats over competing drug price transparency bills is complicating an issue that should have been one of the least controversial parts of the congressional effort to lower health care costs.

Two panels that oversee health care issues each approved measures this year to require drug companies to reveal information when they increase prices. While consumer advocates note drawbacks with both, they clearly prefer a measure from the Energy and Commerce Committee by Rep. Jan Schakowsky, D-Illinois, over a similar Ways and Means Committee bill.

Lawmakers themselves are not holding back criticisms, despite their shared party affiliation.

“The Ways and Means bill essentially leaves it up to the drug companies what they would disclose,” Schakowsky told CQ Roll Call after Energy and Commerce advanced her bill Wednesday.

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“We take a better position on transparency,” said Ways and Means Chairman Richard E. Neal, D-Massachusetts, who emphasized his panel approved its transparency bill in early April, nearly four months before Energy and Commerce. “Ours is ready to go right now.”

Yet some view Neal’s bill as a quickly cobbled-together attempt to give vulnerable Democrats an accomplishment to tout to voters, but they say it offers drugmakers too much leeway. Even some of Neal’s own committee members are unhappy. 

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“The Schakowsky version on the whole is a more comprehensive bill,” said Ways and Means Health Subcommittee Chairman Lloyd Doggett, D-Texas. “It’s important on transparency that we do more than ask pharmaceutical companies to issue another press release and I think hers does more.”

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The dispute is partly a turf battle between two committees who want to produce legislation on a high-profile issue. There is some frustration that Ways and Means moved its bill early. It was also seen as a slight against Schakowsky, who has a long history as a drug-pricing advocate.

Some say the Ways and Means panel’s speed was driven by politics. The measure’s drug price transparency language is based on a bill by Nevada Democrat Steven Horsford, one of the 44 Democrats in the party’s “Frontline” program to protect seats in purple and red districts. The main bill’s co-sponsors include freshmen who captured Republican seats: Jeff Van Drew of New Jersey, Abby Finkenauer of Iowa, Chrissy Houlahan of Pennsylvania, Lauren Underwood of Illinois, Ben McAdams of Utah and Elissa Slotkin of Michigan.

The details in the bills, which each have broad support from the respective committee members in both parties, differ significantly.

The Ways and Means bill would require drugmakers to submit explanations for price increases that exceed 10 percent or $10,000 over the previous calendar year, or 25 percent or $25,000 over three years. Drugs with a launch price of $26,000 or more annually also would have to provide justifications. Drugmakers who don’t submit the justifications would face fines of $10,000 per day until they comply.

Under the Energy and Commerce version by Schakowsky, drugmakers would submit their justifications to the government in advance of the increases, which would have the same calendar year percentage-increase thresholds as the Ways and Means bill, but doesn’t have dollar-amount triggers. Her bill also contains exceptions for drugs intended for a patient population of 200,000 or less.

Drug pricing advocates say they prefer the Schakowsky bill because it appears more likely to result in meaningful disclosures about things like research and marketing expenses.

“All exceptions worry us,” said Alex Lawson, executive director of Social Security Works, a progressive advocacy organization active in the debate. “But defining what is transparency — what is the stuff the companies need to disclose — that’s critical.”

He and others say the Ways and Means version would allow drugmakers a way to avoid thorough reporting. In an April letter to the committee, liberal watchdog group Public Citizen argued that bill language saying the information would be required only “as applicable to the increase” of the drug price could let a company stop short of thoroughly reporting information about costs on research and marketing.

The Energy and Commerce bill also would require the administration to post the report publicly on the day of the increase, while the Ways and Means bill would only require a summary to be public.

Schakowsky’s bill has higher financial penalties for non-compliance than the Ways and Means version, but the amounts were lowered during the Energy and Commerce markups, and advocates don’t think either committee’s fine would be a major deterrent for drug companies with multi-billion dollar products. Her bill would impose a $75,000 a day fine, lowered from her original proposal of $100,000, compared to $10,000 per day under the Ways and Means bill. But $3.7 million to $27.4 million per year, depending on was enacted, could just be seen as the cost of doing business, said Public Citizen’s Steven Knievel.

“Think about a drug like Humira,” he said, an auto-immune condition treatment from drug company Abbvie that earned $20 billion globally last year. “Do you think Abbvie cares about losing a few million dollars?”

While the drug industry is not a fan of the Ways and Means provision that would require drugs with high launch prices to provide justifications, most consumer advocates see the loopholes in the Ways and Means approach as a result of industry influence.

The Energy and Commerce bill, however, is not viewed by consumer advocates as perfect. Advocates still hope that the exceptions for rare disease drugs could be removed. They also worry that the Energy and Commerce bill’s requirements could be avoided if a drugmaker makes multiple increases of just under 10 percent across multiple calendar years, though that risk exists in both measures.

Outlook in Senate

The battle over competing visions for transparency could be replayed in the Senate, which also has multiple committees working on drug price bills.

A measure from the Health, Education, Labor and Pensions Committee was amended during a markup to include language close to the Energy and Commerce bill by Sen. Tammy Baldwin, D-Wisconsin.

Senate Finance Committee ranking Democrat Ron Wyden, D-Oregon, has a bill of his own with a similar intent but different price increase thresholds.

The HELP bill, however, doesn’t include the exception for the rare disease drugs, and some advocates hope that the Senate version could ultimately prevail over the House version when the two chambers iron out their differences.

Ultimately, while more transparency is not seen as a comprehensive solution to the drug price challenge, it is viewed as an essential part of taking on the larger problem.

“Greater list price transparency is critical to shining a light on Big Pharma’s price-gouging and helping to deter the industry’s egregious pricing practices,” said Lauren Aronson, executive director of the Campaign for Sustainable Rx Pricing, a group representing insurers, pharmacy benefit managers and employers.

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