Source: United States Senator for Oklahoma James Lankford
03.16.22
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WASHINGTON, DC – Senator James Lankford (R-OK) today pressed for answers on behalf of Oklahoma seniors on why drug prices remain high, especially as President Biden’s 7.5-percent inflation and rising gas prices are now hitting seniors’ pocketbooks faster and faster. In a Senate Finance Committee hearing entitled, “Prescription Drug Price Inflation: An Urgent Need to Lower Drug Prices in Medicare,” Lankford asked national leaders in drug price policy how we can address issues with increased costs passed to consumers from the pharmaceutical companies, through pharmacy benefit managers (PBMs), through insurance companies, down to local pharmacies. Lankford discussed how to make sure generic drugs actually offer consumers lower prices, instead of their prices being artificially increased by being “placed” on the same price tier as brand name drugs by the PBMs.
Lankford led a group of 30 Senators in urging CMS Administrator Chiquita Brooks-LaSure to stop all retroactive direct and indirect remuneration (DIR) fees, a commonsense reform that could reduce seniors’ out-of-pocket drug costs by more than $21 billion over the next decade. Lankford was also the only Senator to submit his own comment letter on the CMS proposal.
Earlier this year, Lankford celebrated a huge win for Oklahoma seniors and local pharmacies as Medicare officials announced a proposal for sweeping changes to Medicare Advantage and Medicare Part D plans for seniors. Part of this new proposal from CMS mimics plans for lowering out-of-pocket drug costs for beneficiaries on which Lankford has advocated for several years.
Witnesses at today’s hearing included, Rena M. Conti, Ph.D., an Associate Professor of the Department Of Markets, Public Policy And Law at the Questrom School Of Business of Boston University; Douglas Holtz-Eakin, Ph.D., President of the American Action Forum; Stephen Ezell, the Vice President of the Global Innovation Policy, Information Technology and Innovation Foundation; and Steffany Stern, M.P.P., the Vice President of the Advocacy at the National Multiple Sclerosis Society.
Excerpt
Holtz-Eakin: …The issue is the reimbursement through the manufacture’s rebates and/or the DIR from the pharmacies. So we’ve discussed for years in this town the notion of passing that rebate through to the ultimate purchaser at the point of sale, that means that co-insurance and out-of-pocket costs are driven off net prices, not list prices. That takes away the tiered incentives that you’re talking about. That would be one way to go. And my only caution is that, given that there’s a value there that has to be paid for, it means that insurers will probably have to pay the PBMs, and it will show up in premiums.
Lankford: Yeah, but the challenge is the larger drug companies are giving a benefit to the PBM to be able to say, ‘If you’ll put the generic competition on the higher price tier, then the consumer goes to the counter, and says, ‘Hey, this is my script, is there a generic for this?’ And they’ll say, ‘Yes there is. It’s the same price as the brand.’ And they’ll say, ‘Okay well then just give me the brand,’ which drives out the generic from the market. Then the generic can’t compete in that space. And eventually they drop out and stop producing it, and we lose the benefit of it. If a generic is not put on a generic tier, they don’t get the benefit of the lower price…The PBM gets the kickback on it, coming from the pharmaceutical company…
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