Who’s responsible for the rising cost of insulin? Manufacturers and pharmacy benefit managers pointed their fingers at each other on April 10 at a congressional hearing.
Courtesy Oversight and Investigations Subcommittee
Rep. Diana DeGette (D-Colo.), subcommittee chair, questioned insulin manufacturers on why prices are so high.
In response, Democrats and Republicans on the House Energy & Commerce Subcommittee on Oversight and Investigations said they might just take matters into their own hands.
Rebates and discounts are the drivers, according to leaders from three insulin manufacturers.
Mike Mason, a senior vice president of Eli Lilly & Co., was put on the defensive immediately by Subcommittee Chairman Diana DeGette (D-Colo.), who asked him to justify the increases in list prices during the last 10 years.
“Seventy-five percent of our list price is paid for rebates and discounts to secure access so people have affordable access,” Mr. Mason said.
He was cut off in his response as Rep. DeGette pressed further: “So that’s what’s making the price go up and up.”
To which Mr. Mason responded, “$210 of a vial of Humalog is paid for discounts and rebates.” It was noted during the hearing that a vial has a list price of $275.
Doug Langa, an executive vice president at Novo Nordisk, agreed. “There is significant demand for rebates.”
Kathleen Tregoning, an executive vice president at Sanofi, added that, as part of setting the list price, “we have to look at the dynamics of the supply chain, including the rebates.”
Leaders of several pharmacy benefit managers disagreed.
Rep. DeGette asked Thomas M. Moriarty, an executive vice president and general counsel at CVS Health whether he thought rebates were forcing manufacturers to raise list prices. His response? “I do not, no.”
Amy Bricker, a senior vice president at Express Scripts concurred. “I have no idea why list prices are high, and it’s not a result of rebates.”
Sumit Dutta, MD, a senior vice president and chief medical officer at OptumRx, added that there have been list prices rising double digits in nonrebated drugs, in generics where a manufacturer buys out the market to create a monopoly.
“We can’t see a correlation just when rebates raise list prices,” Dr. Dutta said.
While the PBMs denied the rebate system played any role in the setting of list prices, they were firm in maintaining secrecy in rebating process.
When asked by Rep. John Sarbanes (D-Md.) whether the public should be able to track the list price and see the rebates, the net prices, and the savings that are passed along to the consumer, Ms. Bricker said “we don’t believe so.”
She continued: “The reason I’m able to get the discounts that I can from the manufacturer is because it is confidential.”
And while Ms. Tregoning offered support for full transparency in every facet of the supply chain, Ms. Bricker did not. “It will hurt the consumer, Congressman, because prices will be held high.”
“I’m not buying it,” Rep. Sarbanes replied. “I think a system has been built that allows for gaming to go on and you’ve all got your talking points.”
Rep. Buddy Carter (R-Ga.), Congress’ only pharmacist, does not on the committee but was allowed to participate in the hearing. He shared with his colleagues stories of customers leaving prescriptions behind because of cost.
He asked Mr. Langa whether he thought PBM consolidation played a role in driving up rebates and list prices, to which Mr. Langa said, “I think it was a factor.”
Rep. Carter offering a sarcastic congratulations to the panel.
“You’ve done something here today that we’ve been trying to do in Congress for the 4 years and 3 months I’ve been here, and that is to create bipartisanship.”
He then cautioned PBM leaders on the panel that the status quo “is going to end. ... I have seen what you have done with the PBMs” and all the various fees that have been created over time and said that Congress will make sure rebate reform will happen, specifically for Medicare and Medicaid. But he added, “we are not going to stop there.”
During the hearing, the manufacturers, while being not completely committal, suggested that list prices could in fact come down if rebates and discounts were done away with, while the PBMs would not commit to flat administrative fees as opposed to current fees that are based on list prices.
Rep. DeGette said that work will continue until all parties come up with a viable solution. Action “is not optional and it is going to happen.”