In a bid to bring down drug prices, a bipartisan group of lawmakers re-introduced a bill on 16 May that would require pharmaceutical companies to justify any price raises on drugs – by providing a breakdown of their expenses.

A previous version of the bill – introduced last September – stated that the reports should also include manufacturing, R&D, and marketing costs, as well as net profits associated with the drugs.

The lawmakers stress that the legislation will not prohibit pharmaceutical companies from increasing prices, but the bill is supposed to give taxpayers notice of price increases and "bring basic transparency to the market for prescription drugs."

Pharma companies work around single-digit percentage price hikes

Under the revised Fair Drug Pricing Act, companies will have to notify the US Department of Health and Human Services and submit a report 30 days before they increase the price of certain drugs that cost at least USD100 by more than 10% in a year or 25% over three years – a key difference in the revised bill.

When the initial bill was introduced, Allergan chief executive Brent Saunders committed to capping price hikes to single-digit percentages, in most situations. However, several drug makers raised their prices between 9 – 10% to avoid added scrutiny and criticism – such as Eli Lilly, which boosted the list price of its Effient blood thinner by 9.9%.

Now, the revised bill will just have an additional component for the HHS to collate an annual report that summarises the information and reports submitted by the drug makers for Congress.

The example of hep C treatments in Louisiana

The bill arrives amid ongoing global focus over prescription drug costs – an issue that has placed pharmaceutical companies on the defensive.

For the Americans, 60% want the federal government want to take action according to a Kaiser Family Foundation poll. Especially in poorer states such as the state of Louisiana, patients are unable to afford pricey hepatitis C medicines – such as Sovaldi, one of two medicines sold by Gilead Sciences for hepatitis C – that costs USD100,000 per patient, straining many state budgets.

Last year, Louisiana had to ration care and treated just 320 people who were enrolled in its Medicaid program as covering the cost of hepatitis C treatments at current prices would mean an expenditure of USD764 million, according to the Centre for Health Policy and Outcomes at Memorial Sloan Kettering Cancer Centre. The state would need to cut other services sharply to accommodate for the cost.

"We have a public health crisis. The current system is not working," remarked Dr Rebekah Gee, the Louisiana health secretary. "They're charging Bentley prices and Louisiana can't afford a Bentley. It would cost me less to put everyone in the state on a cruise ship for 12 weeks than pay for Sovaldi," she added.

Possible solutions for lowering drug prices

Gee turned to Dr Josh Sharfstein, a former FDA deputy commissioner to review a few options. The first was to seek a license from Gilead for another company to produce lower-cost versions of its drugs. Gilead has already made such an arrangement with seven generic drug makers in India, allowing lower-cost versions of its hepatitis C medicines to be sold in 101 low-income and middle-income countries.

The committees of the National Academies of Sciences, Engineering and Medicine commended this approach last month as a way to eradicate disease in the United States, but it is unsure whether Gilead would be willing to strike a deal for a state Medicaid program.

If Gilead is unwilling, the HHS could look into a century-old federal law to use patented invention without permission, known as Section 1498, which states that a drug maker can demand a "reasonable" compensation – such as royalties – but cannot stop the government from overriding a patent.

"If Price and (President) Trump are interested in lower-priced drug, they have access to a tool that enable them to do that," explained Rachel Sachs, an associate professor at the Washington University School of Law. "This has been invoked repeatedly by the federal government regarding other technologies."

Still no solution from Trump administration

However, this might contradict with FDA's market exclusivity periods that may run beyond a patent. Moreover, some argue that it would send the wrong signal to drug makers and result in less innovative research and development as companies would be discouraged from spending money to discover new medicines if they thought their patents wouldn't be respected.

Federal and state lawmakers have also introduced varying types of bills to address the issues such as a sweeping bill proposed in March by two dozen Democrats to allow Medicare to negotiate prices, remove tax breaks drug makers receive for ad expenses, crack down on deals that delay generics and allow Americans to import medicines from Canada, among other things – with the most recently, the revised Fair Drug Pricing Act.

But it still stands that although President Trump has criticised drug makers for "getting away with murder", his administration has yet to offer a plan. MIMS

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