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Transparency Bills May Have Unintended Consequences

WASHINGTON — Lawmakers developing bills aimed at increasing transparency around drug pricing need to watch out for unintended consequences, several witnesses said Tuesday at a House Energy & Commerce Health Subcommittee hearing.

One example: a provision in the Prescription Drug Sunshine, Transparency, Accountability, and Reporting (STAR) Act, introduced by Rep. Richard Neal (D-Mass.), would require drug companies to make public how much they spend on providing medication and device samples to physician offices.

“We are concerned that this provision might have serious unintended consequences for patient care,” said Madelaine Feldman, MD, president of the Coalition of State Rheumatology Organizations, who was speaking on behalf of the Alliance of Specialty Medicine. “Patients can wait weeks to over a month before getting final approval and then actually getting the prescribed medicine. It’s extremely important to have on hand these samples to start the patients right away; it can make the difference between saving a joint or not.”

Requiring completely public disclosure of the amount spent on samples “[could] have a chilling effect on manufacturers’ willingness to provide us with these samples because of the potential of false shaming campaigns on Twitter and the like,” said Feldman, a rheumatologist in New Orleans. “This can be harmful to the doctor-patient relationship and undermines patients’ trust in their physician.” She urged the lawmakers to instead follow a 2017 recommendation from the Medicare Payment Advisory Commission (MedPAC) that would require drugmakers to report spending on samples to oversight agencies, researchers, payers, and health plans under a confidential data use agreement.

“Samples are very important to beneficiaries, so you don’t want to damage this valuable source of drugs,” said Douglas Holtz-Eakin, president of the American Action Forum, a right-leaning think tank. “I think it makes sense to build on existing reporting rather than inventing new reporting; provide the information to the FDA and provide it to oversight and professional researchers, so the information about the influence of samples on competition is learned, but damaging public disclosure is avoided.”

Another bill provision, in the Fair Accountability and Innovative Research (FAIR) Drug Pricing Act, introduced by representatives Jan Schakowsky (D-Ill.) and Francis Rooney (R-Fla.), would require pharmaceutical companies to announce 30 days in advance if they are planning to raise the price of a particular drug. Rep. Nanette Barragan (D-Calif.) noted that drug companies sued over a drug transparency law enacted in California in 2017 requires drugmakers to notify insurers at least 60 days in advance if they plan to increase a drug price by more than 16% in a 2-year period.

“We’re concerned about the impact that a 60-day notification could have on the market, given the opportunity it creates for bulk purchasing and stockpiling,” said Lisa Joldersma, senior vice president for insurance and state issues at the Pharmaceutical Research and Manufacturers of America — a trade group for drug manufacturers — when asked by Barragan about the matter. Rep. Buddy Carter (R-Ga.), a pharmacist, echoed that concern when his turn came to ask questions at the hearing. “If we knew the price was going up, of course we’re going to buy it at a lower price and stockpile it,” he said. “There is a danger there.”

These two bills were just a part of a package of bills that the subcommittee is considering. Some of the other bills include:

  • The Stopping the Pharmaceutical Industry from Keeping Drugs Expensive Act, requiring drugmakers to submit documentation to the federal government justifying a 10% or $10,000 increase in the wholesale average cost of any applicable drug over a 12-month period; a summary of the manufacturer’s justification would then be published onto the website of the Centers for Medicare & Medicaid Services (CMS)
  • The Public Disclosure of Drug Discounts Act, requiring pharmacy benefit managers (PBMs) to disclose the aggregate amount of rebates, discounts, and price concessions that PBMs negotiate with drug manufacturers, and make this information publicly available
  • The Prescription Pricing for the People Act, requiring the Federal Trade Commission (FTC) to conduct a study on the state of competition in the drug supply chain and to make recommendations for ways to improve transparency and competition
  • The Creating Lower-Cost Alternatives for Your Prescription Drugs Act, eliminating copays for generic drugs for Part D beneficiaries who receive low-income subsidies

Subcommittee Democrats spent much of the hearing time complaining about drug companies’ lack of transparency. Rep. Pete Welch (D-Vt.) asked Joldersma whether her members would be willing to provide the subcommittee with information on how much they spend on research and development (R&D), on advertising, on stock buybacks, and on pay and compensation for top executives. “I would have to consult with my counsel,” Joldersma began, but Welch interrupted her, “What’s the big deal? … Pharma is claiming it spends all this money on R&D but it won’t show us the books, so at a certain point, count me as skeptical.”

“The whining that’s going on about having to talk about some transparency is really irritating to me,” said Schakowsky. “Drug companies tell us all the time, ‘It’s about R&D; it costs so much. … If you’re going to use that as an excuse for raising prices, we have the absolute right to know how much is being spent.”

Republicans, for their part, expressed concerns about whether the bills would impose an undue burden on the drug industry, and stifle innovation. “The more government regulation you put on an industry, the less companies will enter into it,” said Rep. Markwayne Mullin (R-Okla.). “Congress should not be in the business of creating jobs; what we should be doing is creating an environment for entrepreneurs to create jobs.”

“Everybody has some stake to blame on this,” he said. “I don’t want Congress to overreact.”