The Senate Special Committee on Aging is holding the first of a series of hearings Wednesday into why the prices of medicines that have been on the market for decades are suddenly climbing.
The investigation by the Senate committee, led by Maine Republican Susan Collins and Missouri Democrat Claire McCaskill, is focusing on four pharmaceutical companies that bought the rights to certain drugs, and then dramatically increased the prices.
Collins called the price hikes — as much as nearly 5,000 percent in one case — "egregious."
"We've had non-traditional companies come in, buy the rights to these drugs and then hike it up very high — and, as one executive put it, just because they can," Collins tells NPR.
The full version of this story is available online at NPR's Shots blog.
9(MDE1MTIxMDg0MDE0MDQ3NTY3MzkzMzY1NA001))
Transcript
DAVID GREENE, HOST:
Paying for medication, the prices for some drugs have suddenly shot up, and some senators want to know why. Here's NPR's Alison Kodjak.
ALISON KODJAK, BYLINE: Republican Sen. Susan Collins of Maine thinks something is rotten in the drug industry.
SUSAN COLLINS: There have been these egregious price hikes in the costs of certain drugs that have been around for literally decades in some cases.
KODJAK: Collins, along with Democratic Sen. Claire McCaskill of Missouri, is investigating four pharmaceutical companies. Each of them recently bought the rights to old medications and then raised the prices far above their previous costs. The most famous is Turing Pharmaceuticals. It boosted the price for Daraprim, a toxoplasmosis drug, from $13 to $750 for one pill.
COLLINS: Some of these companies seem to act more like hedge funds.
KODJAK: Collins says none of the four companies has fully responded to her request for details about the increases in the prices of their drugs. But the senator determined to get answers.
COLLINS: I suspect that ultimately, we're going to have to resort to subpoenas to get the information that we need for our investigation.
KODJAK: Today, Collins and McCaskill will hold the first hearing in their investigation. None of the drug company leaders will be there, but they will be the topic of the day. The senators both say they want to know how the companies chose the drugs they bought and how they settled on the high prices, Sen. McCaskill.
CLAIRE MCCASKILL: This may be a business model. It may be a way of gouging the public with drugs that are off-patent but don't have a lot of competition because they're not widely prescribed.
KODJAK: She says she became worried about the huge price hikes last summer at a hearing that was supposed be about tax policy. An executive from Valeant Pharmaceuticals was there. The company had recently purchased rights to a heart drug called Isuprel and then raised the price by more than 500 percent.
MCCASKILL: So I asked some pointed questions at a hearing, and then I never got answers. And I still haven't gotten the complete answers.
KODJAK: Valeant declined to speak to NPR for this story. At the hearing, then-CFO Howard Schiller explained the increase this way.
(SOUNDBITE OF ARCHIVED RECORDING)
HOWARD SCHILLER: The analysis on pricing for a drug, as you can imagine, is quite complex. There was work being done by the prior owner before we bought it, looking at the benefits of this drug to this system, to patients, to hospitals. And the conclusion was that it was significantly underpriced.
KODJAK: Traditionally, drug companies defend high prices by saying they spend a lot on research and development. But that's not the case here. Pratap Khedkar of ZS Associates consults with the pharmaceutical industry on pricing. He says companies like Turing are different from traditional drug companies because they're not focused on developing new products.
PRATAP KHEDKAR: It does sound like somebody who's flipping houses or something, right, because you're not adding much value. You're simply looking for arbitrage. So that's much more of hedge fund business than a pharma business.
KODJAK: Collins and McCaskill say they plan several more hearings on high drug prices. Alison Kodjak, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
300x250 Ad
300x250 Ad