Democrats critical of drug-price increases
By Maureen Groppe
Gannett News Service
WASHINGTON — House Democrats accused the pharmaceutical industry yesterday of playing a shell game by increasing brand-name drug prices while agreeing to discount those higher-priced drugs to Medicare patients if a health care bill passes.
"It is hard to escape the conclusion that the industry is positioning the pricing of its products for enactment of the new health reform legislation," Rep. Henry Waxman, D-Calif., said at a hearing on the issue.
The trade association for the industry denied that's happening and said the drug-benefit managers who negotiate with drug makers for lower prices wouldn't accept it.
"My guess is that if a company went to one of these purchasers and said, 'We need you to pay more because health reform is coming,' they would be laughed out of the room," said Rick Smith, a senior vice president for the Pharmaceutical Research and Manufacturers of America.
Democrats called the hearing because of a recent study showing higher-than-usual increases in prices for brand-name drugs.
A price-tracking study conducted by Stephen Schondelmeyer of the University of Minnesota found that the price of brand-name drugs most often used by Medicare beneficiaries increased an average of 9.3 percent between October 2008 and September 2009, while prices for generic drugs fell nearly 9 percent. The increase for brand-name drugs was much higher than inflation and was the biggest increase since at least 2002.
Schondelmeyer said drug prices appear to rise more quickly right before a major policy change. For example, prices also went up before Congress created the drug benefit for Medicare in 2003.
Schondelmeyer said there are many factors that go into a drug's price, but he doesn't think the increases are a coincidence.
"This is a time when there's the most risk for drug companies, having either price controls or a change in the market structure in the way that affects their prices," he said. "So it would be logical that they're looking for ways to buffer their revenues as much as they can for as long as they can."
