Greater Transparency on Drug Prices Needed, Lawmakers Told

Stay ahead of developments in federal and state health care law, regulation and transactions with timely, expert news and analysis.

By Bronwyn Mixter

March 14 — More transparency on drug prices is needed, health insurance plans told lawmakers in comments on a report on the hepatitis C drug Sovaldi.

On Jan. 21, Sens. Ron Wyden (D-Ore.) and Charles Grassley (R-Iowa) sent a letter to the health-care and patient community requesting responses to the policy questions in their report on the price of Sovaldi . The report examined how Gilead Sciences Inc. developed, priced, marketed and sold Sovaldi and its follow-on drug Harvoni. The lawmakers released the comments on the report March 14.

The report said Gilead pursued a marketing strategy and final wholesale price of Sovaldi—$1,000 per pill, or $84,000 for a single course of treatment—that it believed would maximize revenue. Building on that price, Harvoni was later introduced at $94,500 for a single course of treatment. Insurance plans and members of Congress have voiced objections to the high prices of these drugs, saying they are unwarranted.

In their comments on the report, health plans said greater transparency is needed on how drug companies determine prices and also called for more competition in the market. State Medicaid directors said policies are needed to ensure Medicaid enrollees have access to high-cost innovative therapies. And the drug industry said new medicines can help patients avoid costlier health-care services, such as emergency room visits.

“We thank all those who sent constructive, substantial comments on how new drugs are changing the health care system, and the challenges that creates for Medicare, Medicaid, and private health programs alike,” Wyden and Grassley said in a March 14 statement. “This feedback will be thoughtfully reviewed as we consider how to address policy issues such as the financial impact of expensive breakthrough drugs, patient access, and marketplace transparency.”

More Transparency Needed

America's Health Insurance Plans (AHIP) said it believes that “greater transparency around drug pricing and more competition in the market are critical to support sustainable, private-sector solutions that deliver the best value for patients and the health system.”

Specifically, AHIP said health plans support the following:

  • encouraging alternative payment and incentive structures for new drugs and technology;
  • shortening the exclusivity period for biologics to promote competition;
  • pursuing policies that support the development of a robust biosimilar market;
  • prohibiting abuse of the patent process by drug companies;
  • expanding research on treatment effectiveness; and
  • promoting transparency on prescription drug research, development and pricing.

    Specific Medicaid Issues

    The National Association of Medicaid Directors (NAMD) said “there is a clear need for a public policy intervention to address issues unique to the Medicaid program, including to ensure that Medicaid enrollees have appropriate access to breakthrough drug therapies.”

    Specifically, NAMD said policy makers should “revisit the Medicaid Drug Rebate Program (MDRP) in light of the sustainability issues posed by record-high drug therapy prices.”

    When a drug doesn't have a competitor product, Medicaid programs “are unable to exert significant leverage for negotiating supplemental rebates due to the MDRP's coverage requirements,” NAMD said.

    NAMD also said states need different tools to address “high-cost, high-impact” drugs.

    “The traditional drug management tools available to state Medicaid agencies, such as prior authorization and generic substitution, are ineffective in addressing similarly situated drug therapies,” NAMD said. “Outside of Medicaid managed care programs, states are generally not allowed to use cost containment tools (for example, closed drug formularies, tiered copayments, mandatory mail order) used by private purchasers to control drug spending.”

    NAMD also said that states need access to clinical trial data “in order to design the most appropriate coverage benefit for pharmaceutical therapies.”

    “Data transparency is necessary if states are to engage in risk-based arrangements with pharmaceutical manufacturers,” NAMD said.

    In separate comments, the National Committee to Preserve Social Security and Medicare said it “strongly support policies that incorporate effectiveness research into coverage and pricing decisions.”

    “These policies can create an incentive for manufacturers to produce products that generate genuine clinical advancement, and to set reasonable prices,” the committee said. For example, the committee said Congress should consider legislation that would allow Medicare to return to using its least costly alternative policy, under which Medicare “reimburses at the cost of the least costly therapeutically equivalent therapy.”

    Industry's Comments

    The Pharmaceutical Research and Manufacturers of America (PhRMA) said “looking at the cost of new medicines in isolation obscures the savings they produce through better, more effective care and can unintentionally lead to distorted policy conclusions.”

    “Continued advances in biopharmaceutical innovation represent the best opportunity to improve health outcomes and control future health care costs,” PhRMA said. “Unlike most health care services, medicines allow patients to avoid costlier services, such as emergency room visits and long-term care.”

    In its comments, the Biotechnology Innovation Organization (BIO) said it “continues to be concerned that the dialogue around the value of innovative therapies is increasingly focused on too-short a timeframe and/or on a single element of value only.”

    “Instead, value must be assessed across the entire time course over which the therapy's benefits and costs accrue, and the assessment must be holistic,” BIO said. “Innovative therapies have the unique potential to significantly improve the standard of care, mitigating or curing chronic diseases that would have otherwise required a patient to receive treatment over years or decades.”

    BIO also said health insurances doesn't “always translate to access to care, especially for some of the sickest, most vulnerable patients” who are often subject to high cost-sharing requirements.

    “Thus, we urge policymakers to work with a diversity of stakeholders to consider mechanisms to improve patient access to innovative therapies, including, but not limited to, ensuring that existing federal prohibitions on non-discrimination are enforced such that patients are not penalized for characteristics beyond their control,” BIO said.

    To contact the reporter on this story: Bronwyn Mixter in Washington at

    To contact the editor responsible for this story: Janey Cohen at

    Request Health Care on Bloomberg Law