Senator Collins Urges Administration to Prioritize Reducing Drug Prices

Click HERE to read Senator Collins’ letter to Secretary Azar

Washington, D.C. – In response to the significant price increases on hundreds of prescription drugs that took effect on January 1st, U.S. Senator Susan Collins (R-ME) wrote to Secretary of Health and Human Services Alex Azar to urge him to take immediate action to combat rising drug costs.  Senator Collins, the Chairman of the Senate Aging Committee and a member of the Senate Health Committee, pledged to work with the Administration on ways to address the perverse incentives created by rebates calculated as a percentage of a drug’s list price, which appear to drive costs higher.

In her letter, Senator Collins referenced a recent Wall Street Journal report, which found that more than three dozen pharmaceutical companies raised prices on their prescription drugs by an average of 6.3 percent.  In addition, prices for several products increased by double-digits, and the price of one increased by 133 percent.

“When a doctor determines that a patient needs a particular medication, its cost should not be a barrier to the patient taking it.  For more and more Americans, however, rising prices are precluding them from obtaining the prescription drugs they need,” Senator Collins stated in her letter.   “Enactment last October of legislation I authored to prohibit pharmacy gag clauses is one concrete step we have taken to help ensure Americans have access to the lowest prescription drug costs possible, but we must continue to look for ways to lower costs.  Working together, we can produce real results for Americans struggling to afford ever-increasing drug prices.”

Senator Collins expressed her support for rebate reform, which was identified in the Administration’s Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs as an opportunity to incentivize lower list prices.  She noted that this issue was explored in an Aging Committee hearing she chaired in May 2018 on the skyrocketing cost of insulin.

“When asked to explain the causes of increasing insulin prices, manufacturers pointed to increasing demands for rebates and discounts from PBMs. Calculated as a percentage of the drug’s list price, manufacturers contend that rebates are paid to insurance companies and other payers, or their PBMs, in return for ensuring their products will be made available to patients,” Senator Collins wrote.  “They argued that, in some situations, the increasing demands for rebates even exceeded list price increases, such that the net prices received for their products actually decreased as prices went up.”

“Although rebates are certainly not the only cause of rising drug prices, it is clear that they warrant greater attention from both the Administration and Congress.  Rebates calculated as a percentage of list price create an especially perverse incentive for supply chain participants to encourage higher list prices, even where they should be negotiating to reduce prices for consumers,” Senator Collins continued.  “Too many Americans suffer under the burden of high drug prices, and we must do more to provide relief.”

Click HERE to read Senator Collins’ letter.

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Senator Collins has made it a priority to lower the soaring costs of prescription drugs.  In 2015, Senator Collins and then-Senator Claire McCaskill (D-MO) launched the Senate’s first bipartisan investigation into the causes, impacts, and potential solutions to egregious price spikes for certain off-patent drugs.  They released a report on their investigation in 2016.  Following their investigation, Senators Collins and McCaskill authored a bill to improve generic competition and lower the cost of prescription drugs that was signed into law as part of the FDA Reauthorization Act.

Following reports on the skyrocketing price of insulin, Senator Collins chaired a hearing in May 2018 on the reasons for the price spikes and the impacts that these increases have on patient access.  In addition, in November 2018, Senators Collins and Jeanne Shaheen (D-NH), the co-chairs of the Senate Diabetes Caucus, wrote to the three largest insurance companies—United Healthcare, Anthem, and Aetna—requesting information on insulin prices and rebates.

In October 2018, Senator Collins’ legislation to prohibit the use of pharmacy “gag clauses” was signed into law after passing both the House of Representatives and the Senate with overwhelming bipartisan support.  The Patient Right to Know Drug Prices Act and the Know the Lowest Price Act prohibit an egregious practice that concealed lower prescription drug prices from patients at the pharmacy and caused consumers to needlessly overpay.