Hearings on drug prices could reveal bigger offenses
Public outrage over a small pharmaceutical company in September imposing a 5,000 percent price increase for a drug critical to people suffering from a deadly infection has prompted Congress to hold public hearings.
A Senate committee has begun an investigation and wants to question Martin Shkreli, the CEO of Turing Pharmaceuticals and a former Wall Street banker, who made headlines after buying the rights to Daraprim, then promptly raising the price from $13.50 a pill to $750 a pill, pushing the annual price to patients and insurance companies to more than $100,000.
Senators want to question other executives at small drug companies who have built a business model on controlling the market for a drug that has a limited market and no competition — and no generic alternative — then jacking the price sky high.
There have been other stories of less extreme but still dramatic price increases for drugs to treat cancer, hepatitis C, high cholesterol and multiple sclerosis.
While the Senate testimony featuring Shkreli and others drug company CEOs trying to justify price hikes would be infuriating and entertaining, the hearings should not stop there.
The few cases where a drug price has jumped 500 percent or even 5,000 percent get lots of attention, and those companies should be forced to justify price increases based on actual costs. But the bigger problem in America, and one that Congress and the backers of ObamaCare have ignored, is that all drug prices are higher in the United States than in other countries.
The larger problem, which has also been ignored by Congress and the president, is that Americans pay twice as much for health care, on a per-capita basis, than people in most other advanced Western nations. Drug prices are part of the problem of high health care bills in the United States, but only part of the problem.
A story in the Washington Post noted that “Unlike every other advanced country, the United States permits drug companies to charge patients whatever they choose.” The article goes on to explain that Daraprim, sold in England by GlaxoSmithKline, costs 66 cents a pill. And in the U.S., Shkreli increased the price from $13.50 a pill to $750 — because he could.
There is no real competitive marketplace for many prescription drugs. And the relationship between profit-maximizing drug companies and health care spending should be raising questions, even for devout free-market capitalists. Price gouging, when patients have no alternative — and depend on the drugs for their lives — must end.
U.S. Sen. Bernie Sanders, I-Vt., is the co-sponsor of a bill addressing drug costs that would allow Medicare to negotiate lower drug prices, something banned in the Medicare Part D legislation, which demonstrates the power of drug companies in Washington.
Sanders’ legislation, known as the Prescription Drug Affordability Act of 2015, would also allow people to import cheaper drugs from Canada and would require drug companies to reveal the prices they charge for drugs in other countries.
Unlike Obama’s Affordable Care Act, the prescription drug bill supported by Sanders would actually do something to make medicine more affordable.
Any Senate hearing on price gouging by a few rogue drug companies raising prices by 500 percent to 5,000 percent should not end with lawmakers blasting a few CEOs. The hearings should expose the larger scandal — Americans paying significantly more for drugs than people in other countries. That conversation should lead to the still bigger scandal — that Americans, and their employers who pay for their health insurance, pay twice as much per person for health care than people in other countries.
Health care that is unaffordable remains a burden for millions of Americans, their employers and the entire country. Congress and the president, despite passing the Affordable Care Act, have failed to address this crisis — and worse, ignore it and refuse to act.
