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Sen. Elizabeth Warren speaks to reporters

Sen. Elizabeth Warren (D-Mass.) speaks to reporters on June 22, 2021 in Washington, D.C. (Photo: Olivier Douliery/AFP via Getty Images)

Warren Demands Big Pharma End 'Corporate Price Gouging'

Recent price hikes, says a letter led by the senator, "appear to be an example of pharmaceutical companies taking advantage of their abusive market power to expand already large profits."

Jessica Corbett

U.S. Sen. Elizabeth Warren and a dozen of her colleagues in Congress took aim at Big Pharma on Tuesday over "troubling price increases for brand-name drugs in January 2022."

The lawmakers' letter to Stephen J. Ubl, president and CEO of the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA), highlights the findings of two new analyses and declares that "Congress and the public deserve an explanation for how manufacturers have made these seemingly inexplicable pricing decisions."

Warren (D-Mass.) tweeted Wednesday that the 13 lawmakers are demanding not only answers from the pharmaceutical industry but also an end to "this corporate price gouging."

Findings from the first analysis, conducted by the University of Minnesota's Stephen Schondelmeyer, include that during the first 25 days of this year, "manufacturers increased prices for 72% of all formulations of the 100 top-selling drugs" and "26% of all brand-name drugs had price increases, compared to less than 3% of generic drugs."

While the average increase for brand-name products was 5.1%, manufacturers made "extraordinary" hikes of 10% or more for 118 drugs, with the highest exceeding 60%.

As the letter details:

The second analysis, provided at the request of my staff by the Johns Hopkins Drug Access and Affordability Initiative, reviewed price increases in January 2022 for the 20 drugs with the highest expenditures under the Medicare Part D program. Specifically, the researchers provided my staff with Wholesale Acquisition Costs—list prices—for each of these drugs at the end of January 2022 and compared those to list prices for the same drugs one month earlier.

These list prices—like the Average Wholesale Prices provided by Dr. Schondelmeyer—do not reflect discounts and rebates that some purchasers are able to obtain for these drugs. But as PhRMA has previously found, "commercially insured patients pay undiscounted list prices for one in five brand prescriptions, accounting for half of out-of-pocket spending on brand Medicines." An increase in baseline prices, even if they are partially offset by rebates, will still result in an increase in net costs for providers, taxpayers, and consumers, who often pay cost-sharing based on list prices.

The researchers found that in January, manufacturers rose prices for 16 of the top 20 Medicare Part D drugs, and for nearly half of them the price hike was at least 5%.

"The large, across-the-board price increases of popular, brand-name prescription drugs appear to be an example of pharmaceutical companies taking advantage of their abusive market power to expand already-large profits," the letter states. "And the coordinated and timely price increases ring of political opportunism."

The letter notes that "extraordinary" price hikes of drugs "also have the effect of driving up general inflation." As Common Dreams reported Monday, new polling shows a majority of U.S. voters blame corporate profiteering for rising inflation and support a federal crackdown on major companies.

Responding to the letter, PhRMA spokesperson Brian Newell told Newsweek that "we have said repeatedly that we're eager to work with lawmakers on lowering what patients have to pay for life-saving medicines but cherry-picking data and ignoring the larger problems that exist in our healthcare system won't provide meaningful relief."

Though the House-approved Build Back Better Act included some drug pricing reforms, with the package stalled in the evenly split Senate, Sens. Amy Klobuchar (D-Minn.) and Bernie Sanders (I-Vt.)—who both signed Warren's letter—introduced a bill to cut drug prices. However, Sen. Mike Crapo (R-Idaho) last month blocked Sanders' effort to force a vote on the legislation.

Less than a week after that setback, advocacy groups launched the "Make Meds Affordable" campaign, which calls for President Joe Biden and Health and Human Services Secretary Xavier Becerra to allow for the production of generics that would eliminate Big Pharma monopolies.

Warren, who joined the launch, said that "President Biden and Secretary Becerra can end this shameful price gouging by using their existing authorities to lower drug prices and crack down on the monopoly power of giant pharmaceutical companies—and they need to do it now."

Biden, during his State of the Union address Tuesday night, signaled that he still hopes to cut drug prices—saying that insulin prices should be capped at $35 a month and Medicare should be allowed to "negotiate the price of prescription drugs" with manufacturers.

While applauding the remarks, some campaigners also reminded Biden that he "doesn't need to wait for Congress to take immediate action." The president, Social Security Works tweeted Wednesday, "can and must use his executive power to lower drug prices!"

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