Senate Aging committee sickened by skyrocketing drug costs

In testimony before the Senate Committee on Aging on December 9, 2015, witnesses described the burden on hospitals and patients that result from dramatic hikes in the prices of drugs. The hearing focused on several single-source drugs with expired patents. These drugs were on the market for 30 years or longer and were priced under $20 per dose until investors purchased the rights to the drugs and boosted the prices up to 40 times without any improvement “because we can.”

Committee Chair Susan Collins (R-Maine) and Ranking Member Claire McCaskill (D-Mo) both described the problem, noting that the market fails with respect to these drugs. Although their patents expired long ago, a relatively small number of patients need them at any one time, so that generic manufacturers do not see sufficient potential profit to enter the market.

Dr. David Kimberlin, Co-Director of the Division of Pediatric Infectious Diseases at the University of Alabama at Birmingham, needed to prepare to treat a baby who would be born with toxoplasmosis, which can cause blindness, deafness, brain damage, and death when transmitted from a pregnant woman to her fetus. He told the committee that Turing Pharmaceuticals had recently purchased pyrimethamine, which treats this condition, and raised the price more than 5,000 percent, from $13.50 to $750 per 25 mg pill. Turing did not permit sales directly from the manufacturer to the hospital or its compounding pharmacy. The infant would need the drug for 12 months, and the dose would increase as the baby grew. A course of treatment that would have cost $1,200 would now cost $69,000. The cost to treat an adult with HIV for the same disease rose from $8,500 to over $500,000. “Babies’ lives hang in the balance,” Kimberlin said.

Gerard Anderson, Director of the Center for Hospital Finance and Management and Professor of Public Health at Johns Hopkins University, told the committee that consolidation of the pharmaceutical industry through mergers and acquisitions during the last five to ten years led to shortages of some generic drugs and then to rising prices. Larger generic manufacturers often choose not to make any drug that will bring in less than $100 million per year, he said.

Erin Fox of the University of Utah Health Care System told the committee that her hospital had used nitroprusside and isoproterenol for years to treat patients in “code” status. When Marathon purchased these drugs from Hospira in 2014, the price of nitroprusside skyrocketed from $50 to $215, and isoproterenol from $50 to $440. The following year, Valeant purchased the drugs and raised the prices to $650 and $2,700, respectively. She noted that the hospital is paid primarily on a capitated basis, so that it could not just pass on the cost increase to payers.. If they continued to buy these drugs in the same quantities, their pharmaceutical expenditures would increase by $1.6 million. Instead, the physicians decided to remove the drugs from the “crash carts” used when patients “code.” The drug will be available only after an urgent request to the hospital pharmacy.

Potential legislation

The witnesses and the members of the committee noted that the government’s interest in promoting research and development does not apply in this situation because the drugs are “off patent” and the companies are making no efforts to improve them. Some considered the possibility of price controls in the limited situation where there is no competition for a particular drug. Fox suggested that drug labels be required to list the manufacturer as well as the distributor.

The committee members asked whether the information on the patent status or competition for a drug was available. Witnesses referred them to the FDA Orange Book, which lists every approved drug and its generic equivalent.