March 24, 2021
HELP Committee hearing on prescription drug prices
On March 23, the Senate Committee on Health, Education, Labor & Pensions (HELP) Subcommittee on Primary Health and Retirement Security held a hearing entitled, "Why Does the US Pay the Highest Prices in the World for Prescription Drugs?" The Committee heard from patient, provider, governmental, and think tank representatives who expressed their views on the way forward to address the high cost of prescription drugs. Several of the Democratic witnesses expressed concerns with "government-granted monopolies" in the form of patents that allow companies to set any price they want and expressed the need for government price negotiation based on the clinical benefit that drugs provide to a patient. On the other hand, the Republican witness cautioned that Congress must protect the incentives that drive pharmaceutical innovation and should instead facilitate competition and promote the approval of innovative medicines to compete with branded drugs, applauding investments in public-private-partnerships such as those that resulted in record approval of COVID-19 vaccines.
While there was bipartisan agreement on the need to address the high cost of prescription drugs, Democrats and Republicans similarly differed on the best solution. Several Committee Democrats voiced their support for Medicare price negotiation as well as proposals that leverage international reference pricing, allow for the importation of drugs from Canada, and reduce perverse tax incentives such as those for direct-to-consumer marketing. Republicans on the committee, on the other hand, noted their support for proposals aimed at addressing abuses of the patent system, such as patent "thickets" and "drip feed" strategies, as well as legislation to prevent gaming of the Orphan Drug Act and increase transparency across the system. Several Republicans cautioned about the "chilling effect" on innovation and investment should Medicare begin negotiating drugs. Sens. Lisa Murkowski (R-AK) and Tammy Baldwin (D-WI) both expressed support for the bipartisan Fair Drug Pricing Act, which would require advance notification of price increases above 10% in one year or 25% over three years.
Additional details available in the attached Tax Alert.
Prescription drug prices hearing