Recent price spikes in generic prescription drugs are the result of market problems, including lack of competition and access, witnesses and lawmakers said Wednesday during a Senate hearing meant to find solutions to preventing sudden price hikes in off-patent medicines.
The Senate Select Committee on Aging is focusing on four companies that recently acquired generic drugs and then immediately raised their prices by as much as 5,000%. The different drugs treat conditions such as kidney disease, cardiac arrest and parasitic infection.
The committee is focusing on Turing Pharmaceuticals, Valeant Pharmaceuticals, Retrophin Inc. and Rodelis Therapeutics. The first two faced especially harsh criticism.
Lawmakers used terms such as “egregious,” “unconscionable,” “extortion” and “price gouging” to describe the companies' actions. The price increases have hit a nerve with many in Congress as well as sparked outrage among presidential candidates of both parties.
The practice of hiking prices normally occurs with generic drugs that treat serious conditions but that are not in wide demand. Other companies aren't likely to enter the market because it is not typically profitable. So hospitals, insurers and patients have no other choices. Thus, a company can drastically increase prices without retribution.
Chairwoman Sen. Susan Collins (R-Maine) said pharmaceutical companies have some market protections because drug development is time-consuming, expensive and frequently unsuccessful. Some companies have begun abusing those measures, however.
“That balance that we've struck never anticipated companies acquiring off-patent drugs and jacking up their prices to enormous heights,” she said.
Dr. Erin Fox, director of the drug information service at the University of Utah, said that not only have companies that acquire generics not paid the original research and development costs for the drug, but they are also sometimes not even manufacturing it themselves.
“They're simply putting their sticker on somebody else's product,” she said.
Mark Merritt, president and CEO of the Pharmaceutical Care Management Association, said the Food and Drug Administration could speed up approval of generic drugs, which normally takes about three years. Most pharmaceutical companies aren't going to wait that long for a generic, especially when they don't know if other companies may simultaneously be doing the same thing.
He also suggested that government watchdogs keep track of what drugs may be vulnerable to this type of action by looking at markets for generics.
“The hedge funds have these lists, the government might as well, too,” Merritt said.
Pediatrician Dr. David Kimberlin of the University of Alabama at Birmingham described having difficulty getting life-saving medicine for a newborn who needed it to survive, because the price was exorbitant and strict contracts about who could buy the medicine made finding it a chore.
He said doctors are frustrated at having to face these issues.
“We'll beg for access to these drugs,” he said. “As you guys have heard, this is life-saving treatment for these patients.”
Sen. Tim Kaine (D-Va.) said the prescription drug market is distorted because patients need the medicines to survive.
“We're not talking about healthcare,” he said. “We're talking about ransom being paid by hostages.”