by John Haughey
A bill co-sponsored by Florida Sen. Rick Scott that would penalize pharmaceutical companies that have received federal research grants for charging “unreasonable prices” for prescription drugs has secured a key endorsement.
The American Association of Retired Persons [AARP] — the nation’s largest advocacy group with 38 million members — calls the proposed We Protect American Investment in Drugs [We PAID) Act “one step to help reduce drug prices.”
“Each year, federal taxpayers contribute billions towards the development of new drugs,” AARP Legislative Policy Director David Certner wrote in an Aug. 12 letter. “In fact, every single one of the 210 drugs approved by the Food & Drug Administration from 2010-16 was based on some element of science funded by taxpayers through the National Institutes of Health [NIH]. However, those same drugs are often priced so high that they are unaffordable to the millions of older Americans who need them. There is no reason why Americans should be unable to afford the prescription drugs that their tax dollars helped to develop.”
Scott, elected to the U.S. Senate in November after two terms as Florida governor, is a former healthcare industry executive. The conservative Republican and co-sponsor, Sen. Chris Van Hollen, a Maryland Democrat, introduced the We PAID Act of 2019 on July 31.
The proposed bill would direct the National Academy of Medicine to study how to determine the “reasonableness” of a drug’s price, considering factors such as:
- Federal funding used in the development of the drug;
- Affordability of the drug to consumers;
- The price of the drug in other similar, industrialized countries.
The bill seeks to establish an independent Drug Affordability & Access Committee to “determine a reasonable price” for each applicable drug, based on the results of the National Academy of Medicine study.
Under the bill, drug manufacturers with licensing agreements for technology patented by the U.S. government, or by an entity that developed the technology using federal funding, must agree to:
- Not exceed the reasonable price determined by the Drug Affordability and Access Committee beginning after one year on the market;
- Limit the annual price increase on any drug developed using this licensed technology to the rate of medical inflation;
- Submit the manufacturer’s drug price and information on the development of the drug to the Drug Affordability & Access Committee for a reasonable pricing determination;
- Require proper disclosure of government support in the development of patented technology.
The AARP, noting the annual median income of Medicare beneficiaries is about $26,000, cited a recent Rx Price Watch Report that documented the average, the prices of brand-name drugs “widely used by older Americans” increased four times faster than the rate of inflation in 2017.
“Further,” Certner wrote, “the average annual cost for a brand-name drug used on a chronic basis was nearly $6,800, almost $1,000 higher than the average annual cost just two years earlier.”
According to the AARP, Medicare Part D enrollees take an average of four to five prescriptions per month, and over two-thirds have two or more concurrent chronic illnesses.
For the average Part D enrollee who takes 4.5 medications regularly, Certner said, the annual cost of therapy “would have been more than $30,000 in 2017 — more than 20 percent higher than the median income for Medicare beneficiaries. This population simply cannot afford to keep paying higher and higher prices for the medications they need.”
In a joint statement, Scott and Van Hollen said the We PAID Act “is a common-sense way to reduce the cost of prescription drug prices” and thanked the AARP for its support.
“Families across our nation, including seniors, are struggling to afford the prescription drugs they need to survive,” they said.
In a later statement, Scott added, “There is no reason drug companies that use taxpayer dollars to develop prescription drugs should be raking in profits by charging unreasonable prices to American patients. This bill prevents that, and we urge all of our colleagues to join us in support of this common-sense, bipartisan legislation.”
The We PAID Act has been referred to the Senate Health, Education, Labor and Pensions Committee where it awaits a first hearing.
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John Haughey is a contributor to The Center Square.