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Senator Lankford Address Rising Prescription Drug Prices on Senate Floor

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WASHINGTON, DC – Senator James Lankford (R-OK) today addressed the rising cost of prescription drug prices on the Senate floor. Since January, the Finance Committee has held several hearings to better understand the complexity of drug pricing, including the steps a drug takes as it goes from research and development to the medicine The first of the multi-part series of hearings dealing with rising drug cost, Lankford focused on the 340B Drug Pricing Program’s increasing costs, the Medicaid rebate program, and restructuring the way drugs are priced to increase transparency. In March, during a Finance Committee hearing, Lankford questioned Health and Human Services Secretary on issues concerning the rising cost of prescription drugs and the Administration’s ongoing work to address the cost. The third hearing on prescription drug prices was held in April. Lankford focused on the role and recent merger activity of pharmacy benefit managers (PBMs), as well as possible anticompetitive behavior during his questioning.

Lankford introduced The Prescription Pricing for the People Act of 2019 with Senators Chuck Grassley (R-IA), Chairman of the Finance Committee, and Senator Maria Cantwell (D-WA). The bill would require the Federal Trade Commission (FTC) to study the role and recent merger activity of pharmacy benefit managers (PBMs), as well as possible anticompetitive behavior. 

Lankford is a member of the Finance Committee, which has jurisdiction over health care, including Medicare and Medicaid.

Transcript: 

I rise to be able to talk to this body again about health care and the cost of health care. It’s been an issue that’s been an ongoing dialogue for a long time around the Senate and around Congress. It’s an issue that was supposedly settled when the Affordable Care Act was passed, but ironically enough, my Democratic colleagues have now joined Republicans in saying that they want to repeal and replace the Affordable Care Act. They’re not using the term ‘repeal and replace’, they’re just saying they want to do Medicare For All and build into that is completely taking out the Affordable Care Act and replacing it with something different. So we’re ironically on the same spot in some ways that we both realize and we have both come to the same spot that the Affordable Care Act didn’t pass. Actually, it did pass, but it’s not working. So the challenge now is: what to do with health care. We’re trying to be able to break into pieces now what we can actually do together to be able to get this done, beginning with the cost of prescription drugs. 

I continue to hear from Oklahomans all over the state about how hard it is to be able to deal with the cost in prescription drugs, how rapidly the costs are increasing, and how sporadic the cost changes really are. They’ll have a drug that costs a small amount one month and comes back a month later and finds a dramatic increase for the exact same drug. They can go pharmacy to pharmacy and find a different price for the exact same drug or find the pharmacy that’s closest to them, doesn’t offer that drug, a different pharmacy is the only one that’s allowed to have that drug. And the complexity is driving them crazy, rightfully so. 

We’re finding, as we peel back the layers on pharmacy issues, that the complexity is being built into high-cost overruns. For the past few months, we’ve looked at every step in the drug process, in the approval, to research development, to try to figure out how it’s actually getting to the consumer, and the cost. In the past several things have occurred. The Administration has aggressively been approving generics. In fact, the Administration has approved a record number of generics. Those generic pharmaceuticals are much less expensive than the branded pharmaceuticals and many of those have been waiting a very long time in the Food and Drug Administration to actually be approved. The Food and Drug Administration is rapidly getting those out the door that helps consumers. 

Something else we’ve done in Congress is trying to address something called the “gag clause”. The” gag clause” is one of those things that was just behind the scenes that no one knew, but the pharmacists knew because if you came in with your insurance card to pick up your prescription the pharmacist knew the actual cost that you would pay if you paid in cash. And often you could get that same prescription paying cash less than you could with your insurance card. But the pharmacist was prohibited from actually telling you that. We, in Congress, have addressed that in a bipartisan way to be able to release that “gag clause” and allow pharmacists to be able to actually tell people their options on pricing. Now you should say, ‘That is an absolutely crazy thing. Who put that gag rule in?’ Well, the system and the structure behind the scenes that negotiates all of it said, ‘If you want to be a pharmacy that sells these drugs, you have to submit to these rules.’

The culprit behind many of these issues as we found is a group called the Pharmacy Benefit Managers. You’ll hear it called just the PBMs. Those Pharmacy Benefit Managers are supposed to negotiate between the manufacturers and the insurance plans to lower the prices. And in many areas, they have lowered prices. But they have also given preferred formulary placement to some of their preferred pharmacies so that some pharmacies get that drug and other pharmacies that are competing with them don’t get access to that drug. And often it is the drug that is the highest margin drug only their pharmacies will get and other pharmacies will not. It’s become an anti-competitive piece in the background when it was supposed to be something that was a highly competitive piece to be able to actually help the consumer. Fortunately, PBMs created one of the most elaborate, complex, and opaque systems of pricing, which is a tremendous amount of market distortion and at times as limited patients’ access to those drugs. It’s a system that they have been able to take advantage of and create financial incentives to be able to help their bottom line in the process rather than to actually help the consumer oftentimes. And the rebates that many consumers have heard about, that they wonder who is getting a rebate, they go to be able to pay for their pharmacy pickup and they’re not getting a rebate, but there is a rebate going somewhere, just not to them. 

So here’s the challenge. We’re trying to be able to peel back with greater transparency what is happening in the Pharmacy Benefit Manager world and how a small group, it’s actually three companies, have 90 percent of the market nationwide for Pharmacy Benefit Managers, how that middle man in the process actually handles pricing and negotiation. If you talk to any pharmacist that’s an independent pharmacist anywhere in the country, and certainly across my great state, they’ll all express their frustration with pharmacy benefit managers and their access to some drugs, not to others, and the stipulations they put there deliberately to be able to hurt them to be able to help others. I join my colleague Senator Cantwell in trying to shine some light in the operations of PBMs within the drug chains. Consumers deserve greater transparency. That will help us understand the actual costs of drugs and how those costs are actually getting to consumers or not to consumers in the process. The PBMs need greater examination and we’re finally taking that up to be able to walk through the process. On the Finance Committee, we’re dealing with several issues. Led by Senator Grassley, we’re walking through Part B of Medicare, Part D of Medicare, and trying to be able to examine what can be done to be able to help the actual consumers. Our goal is: how do we actually increase the options in drugs that are out there? How do we stop the cost increases? And how do we decrease out-of-pocket costs for pharmaceuticals?

In Part B, these are drugs that are often intravenously done in a hospital setting or inpatient setting. As we’re working through that process we’re trying to find perverse incentives that are built in, because right now, physicians are actually paid a percentage of the medicine that they prescribe in Part B. That means if there are three medications that are out there, if a doctor prescribes the highest-cost medication they get a much higher reimbursement. It’s not a flat amount. Now all three may be intravenous but whichever one is the most expensive actually helps the doctor the most. Now I’m not challenging doctors in saying they’re always prescribing the branded drug and the most expensive in the process. That is between the doctor and patient to determine, but there is no doubt a perverse incentive built into this that if they prescribe a more expensive drug, the doctor in his office actually benefits from it. We need to be able to fix that.

In Part D there are reforms that can actually slow the growth in cost increases and allow people to have greater access to drugs. We’re not interested in some kind of formula where we’re actually going to decrease the options to patients of what drugs they can actually get to in their formulary. That’s the great thing about being an American is that we don’t have limited formularies, it’s very open in the process so that Americans can try different pharmaceuticals and see which one works best for them. That is not chosen by the government, it’s chosen by them and their doctors. But Part D definitely needs a redesign of the benefits structure because right now things like the doughnut hole drive up costs for consumers. But there is a way that we’re exploring to be able to limit the out-of-pocket costs for beneficiaries. So that there is a lifetime cap sitting out there, there’s an opportunity to know that if I end up with cancer or some other rare disease, that I’m going to have this out-of-control cost on the pharmaceutical side. Or to be able to know that there’s a doughnut hole waiting for me when I get a couple of thousand dollars in, I’m suddenly going to have a very expensive time so I can afford my insurance in January, February, and March, but from April to August, I can’t afford prescriptions anymore. We can’t have that. We’ve got to address those issues because that dramatically affects the out-of-pocket costs. 

There are lots of other options that we’re working through this process. Like the rebates, as I mentioned before. Actually getting to the consumer, not to the companies behind the scenes. Dealing with how to get greater advantage with biosimilar drugs, very similar to the generic drugs, just in a different category. A reduced cost, but allow them to get opportunities to get to those drugs faster. We have got to deal with some of the patent issues to be able to make sure that drug manufacturers can’t hold on patents abnormally long and so that generics can actually get out to people, or be able to bundle them together to be able to restrict their patients.

We’ve got to end this practice of surprise medical bills. Some folks have no idea what that is, other folks know all too well. They looked at their insurance, they went to the hospital, they saw this hospital is in network, they saw their doctor was in network, they go to the hospital in network, they go to the doctor in network, but they get some giant bill from an out of network anesthesiologist or the lab was out of network, though the hospital is in network, and so they get a giant bill from the lab. We are working to be able to end that practice of having labs that are out of network or certain specialists that a doctor has sent them to, that the patient assumed they were in network, but then they find out certain individuals that have taken care of them there are out of network and much larger.

We are also dealing with the issue of air ambulance surprise bills, which has been a great challenge for those folks in rural America, that they are having to be transferred long distances to be able to get to a hospital and then get an enormous bill for an out of network air ambulance as a surprise billing. There are ways that we can address this to be able to deal with the out of pocket costs and we are focused on areas where we can find agreement and things that we can do to be able to work through the process.

There is much to be done, but the area of prescription drugs and the area around in network, out of network, or surprise medical bills are areas where we should be able to find common ground. And I’m grateful that I’m part of this dialogue to be able to try to help find ways to get this together, to get this resolved, and get a better situation for American consumers and patients in the days ahead.

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