Washington, D.C. — U.S. Senators Susan Collins (R-Maine) and Claire McCaskill (D-Missouri), the Chairman and Ranking Member of the Senate Aging Committee, released a report on drug pricing today titled, “Sudden Price Spikes in Off-Patent Prescription Drugs: The Monopoly Business Model that Harms Patients, Taxpayers, and the U.S. Health Care System.” The comprehensive report details the findings stemming from the Committee’s bipartisan investigation into abrupt and dramatic price increases for prescription drugs whose patents expired long ago. Through close examination of the monopoly business model used by four pharmaceutical companies to exploit market failures, the report examines how companies acquired decades-old, off-patent, and previously affordable drugs and then raised the prices suddenly and astronomically at the expense of patients. The report provides case studies of the four companies; explores the influence of investors; assesses the impacts of price hikes on patients, payers, providers, hospitals, and the government; and discusses potential policy responses.
"The skyrocketing prices of prescription drugs affect every American family, particularly our seniors," said Chairman Collins. "This report is the culmination of the Senate Aging Committee's year-long, bipartisan investigation into the egregious price increases on a number of decades-old drugs acquired by pharmaceutical companies that act more like hedge funds. We must work to stop the bad actors who are driving up the prices of drugs that they did nothing to develop at the expense of patients just because, as one executive essentially said, “because I can.”
“The hedge fund model of drug pricing is predatory, and immoral for the patients and taxpayers who ultimately foot the bill—especially for generic drugs that can be made for pennies per dose,” Ranking Member McCaskill said. “We’ve got to find ways to increase competition for medicines and ensure that patients and their families aren’t being gouged.”
Chairman Collins and Ranking Member McCaskill launched the Aging Committee’s bipartisan investigation in November 2015 following a series of media reports detailing dramatic drug price increases after the acquisition of decades-old, off-patent, and previously affordable drugs. The investigation centered on Turing Pharmaceuticals, Retrophin, Inc., Valeant Pharmaceuticals International, Inc., and Rodelis Therapeutics. Evidence gathered by the Committee also suggests that additional companies have employed the monopoly business model uncovered in this report, putting the health and lives of Americans at risk.
The views of a wide-range of health policy experts and clinicians were considered, and the report identifies potential policy responses:
Throughout the investigation, Chairman Collins and Ranking Member McCaskill have been committed to promoting innovation while improving access and affordability of prescription medications for patients, particularly for the 90 percent of our nation’s seniors who take prescription drugs. Chairman Collins and Ranking Member McCaskill strongly support continued efforts to stop bad actors who are acquiring drugs that have been off-patent for decades and driving up their prices solely because they can.
Background on the Aging Committee’s Investigation
During the course of its bipartisan investigation, the Aging Committee held three hearings; interviewed scores of patients, doctors, hospital administrators, consumer advocates, health experts, and pharmaceutical industry executives and board members; reviewed more than one million pages of documents obtained from the four companies; and deposed or took transcribed interviews of numerous corporate witnesses.
The first hearing of the series, held on December 9, 2015, sought to identify and define the problems resulting from these price increases. The second hearing, held on March 17, 2016, took an in-depth look inside the monopoly business models of Turing and Retrophin, both formerly headed by Martin Shkreli. The third hearing, held on April 27, 2016, investigated Valeant’s business model, its investor relationships, and the harm caused to patients and the health care system by the enormous price increases Valeant imposed on certain drugs it acquired.