Transparency is Washington's buzzword du jour in regards to healthcare, but its limitations were evident Tuesday in a House committee hearing on drug prices.
As the House Energy and Commerce health panel met to discuss yet another slate of drug-related proposals, pharma and pharma benefit managers tried to negotiate how much financial information they would need to disclose. Meanwhile pharma critics warned that transparency alone won't fix the price problem.
Most of the seven bills under consideration were aimed at getting manufacturers' justifications for their price hikes, or revealing the obscure negotiations between pharmacy benefit managers, insurers and drugmakers.
But some Republican lawmakers were clearly uncomfortable with some of these bipartisan proposals, echoing criticisms from the Pharmaceutical Research and Manufacturers of America and an allied witness that the measures could burden companies and even compromise pharmaceutical trade secrets.
Kristin Bass, chief policy and external affairs officer of the Pharmaceutical Care Management Association, which represents PBMs, didn't want company-specific negotiations to be made public, arguing that it could jeopardize negotiations with manufacturers. Bass also defended the practice of PBMs pushing higher list-price drugs in their formularies, drawing higher rebates.
Another witness, the conservative economist Douglas Holtz-Eakin, who has ties to the pharmaceutical industry, warned that some of the proposed reporting requirements would burden manufacturers without guaranteeing they would lower prices.
These arguments drove an exasperated Rep. Peter Welch (D-Vt.) to advocate outright for government negotiation of prices. He has long been pushing for some kind of negotiation measure to give the government means to lower costs. He said the reason lawmakers are talking about transparency measures is because everyone's frustrated with the secretiveness of the system and the high prices that they don't understand.
"What it reflects is the frustration that states and payers are having, to try to get some grip on why they're getting hammered every year," he said.
On negotiation, and the potential power of formularies to force negotiation, Welch reminded the panel that formularies already exist but that they "are not for the benefit of the public but of the PBMs."
Answering Holtz-Eakin's criticism that "I don't think transparency in the end is going to deal with the places where we have high drug prices," Welch asked whether he would support negotiation.
While Holtz-Eakin made it clear he would not, two other panel witnesses—Frederick Isasi, executive director of the patient advocacy group Families USA, and Mark Miller, executive vice president of healthcare for Arnold Ventures—urged lawmakers to go further than transparency.
"Is it just transparency or is it transparency with teeth?" Isasi said. "The government needs to say: This is not a fair price; we will not pay it. We have to combine both these things together."
Welch's frustration reflects the growing restlessness among lawmakers who want serious pricing reforms as time is running out for Congress' legislative push on costs.
House Speaker Nancy Pelosi (D-Calif.) has yet to unveil the Democratic leadership plan that has been in the works but under wraps for months as her office negotiates with White House officials.
Meanwhile, Energy and Commerce Health Subcommittee Chair Anna Eshoo (D-Calif.) told witnesses on Tuesday that lawmakers would consider their testimony and recommendations about the proposed bills.
One of the measures that got significant industry pushback would make drugmakers give 30-days' notice to the HHS secretary before raising certain drug prices as well as justify price hikes with reports of research and development spending, revenue and profits. Bill authors Reps. Jan Schakowsky (D-Ill.) and Tom Rooney (R-Fla.) propose a $100,000 penalty for each day a manufacturer doesn't comply.
Another measure by Reps. Steven Horsford (D-Nev.) and Tom Reed (R-N.Y.), would require manufacturers to justify their wholesale acquisition cost hikes above certain thresholds, or a price that is $26,000 or more for a year's supply of a drug or for a course of treatment. The CMS would publish a summary of their reasoning for the increases.
Two additional bills dealt with PBM reporting: under the Public Disclosure of Drug Discounts Act by Reps. Abigail Spanberger (D-Va.), Jodey Arrington (R-Texas) and Brendan Boyle (D-Pa.), PBMs would have to report the aggregate totals of rebates, discounts and price concessions they have negotiated with drugmakers, and then publish the information.
A proposal by Reps. Jerry Nadler (D-N.Y.) and Doug Collins (R-Ga.) would task the Federal Trade Commission with studying potentially anti-competitive behavior in the PBM industry, including patient steering or favoring higher list-price drugs in their formularies.
While Bass from the Pharmaceutical Care Management Association said PBMs support aggregate reporting, the ongoing dispute between manufacturers and PBMs was clear when PhRMA Senior Vice President of Policy and Research Lisa Joldersma said Congress should also require reporting of the administrative fees that manufacturers pay PBMs.
"It seems to be that PBMs double-dip—through rebates, negotiations, and the administrative fees," said Rep. Kurt Schrader (D-Ore.) "It seems a little inappropriate."