Floor Remarks by Senator Chuck Grassley of Iowa

On Transparency in Prescription Drug Pricing

Thursday, November 29, 2018



Mr. President, millions of Americans woke up this morning and started the day with their dose of prescription medication.

Their daily regimen is prescribed by their health care provider to treat an illness or to improve their quality of life. And for many Americans, prescription medicine extends and saves their lives. 

Without their prescription medication, millions of Americans would not survive.

For so many of our loved ones who have diabetes, high blood pressure, cystic fibrosis, epilepsy, or other chronic health conditions, prescription drugs are a basic necessity of life.

Without pharmaceutical treatments and cures, too many family gatherings at Thanksgiving arguably would have fewer plates at the table this holiday season.

As a nation, we are incredibly blessed to live in a country where investment and innovation unlocks cures and treatments.

And yet, the escalating prices of prescription drugs are a consuming concern for millions of Americans, including Iowans who bring up this subject regularly at my county meetings.

I’ve come to the floor of the Senate today to address the sticker shock that greets consumers when they pick up their medicine at the pharmacy or open their medical bills after a hospital visit.

Rising drug prices that Americans pay for out of pocket and as taxpayers are gobbling up a bigger share of their income.

For some people on fixed incomes, sky-high drug prices are eating up every spare penny they can scrape together just to fill their prescriptions.

It’s time we talk turkey with our friends in Big Pharma.

As a fiscal conservative who whole-heartedly believes in free enterprise, I don’t want the government intruding unnecessarily in the marketplace.

The reason millions of American benefit from life-saving drugs in the first place is due largely to capitalism and the entrepreneurial spirit that drives innovation and opens new frontiers of modern medicine.

I also believe that strong intellectual property rights help incentivize companies to invest in research and development so new cures are found for our loved ones. 

However, the government does have a responsibility to keep check on unfair business practices and rein in anti-competitive behaviors that harm consumers and fleece taxpayers.

This can happen in a number of ways.

It happens when brand name and generic drug makers game the system to pad their profits at the expense of taxpayers and consumers.

It happens when hospitals, middlemen, and providers determine which drug to prescribe based on its reimbursement and mark-up from insurers, including public health programs for the military and veterans or Medicare and Medicaid.

Throughout my public service in the United States Senate, I’ve established a fundamental commitment to transparency.

From whistleblower protections to the public’s right to know, sunlight sweeps away wrongdoing, strengthens good government and helps consumers and taxpayers get the most bang for the buck.

I’ve worked across the aisle to apply this standard to help lower drug prices.

It’s an issue that resonates loud and clear in every household in America.

In fact, Iowans contacted my office a couple of years ago regarding sticker shock for their EpiPens.

The escalating prices they were paying for the life-saving anti-allergy medication jumped to $600 for a two-pack.

On their behalf, I started digging for answers. It turns out that Mylan, the EpiPen distributor, had jacked up the price for over a decade during the Obama administration.

In fact, from 2006 through 2016, it rose more than 400 percent.

EpiPen is the most widely prescribed epinephrine auto-injector in the United States. Parents, grandparents, day care providers and teachers across the country keep their homes, cars and classrooms stocked in case of an emergency.

How was Mylan able to do this?

It classified EpiPen as a generic drug instead of a brand name drug in the Medicaid Drug Rebate program.

That incorrect classification cost the U.S. Treasury and states bigtime by allowing Mylan to pay lower rebates.

The watchdog at the Department of Health and Human Services, at my request, found the misclassification may have resulted in the taxpayers and the states overpaying for the drug by as much as $1.3 billion dollars over 10 years.

What’s more, a competing pharmaceutical company sued Mylan using the False Claims Act, a whistleblower law I have updated over the years. This anti-fraud tool encourages people to report and expose wrongdoing against the government.  

In this case, it exposed fraud against the taxpayer for misusing the Medicaid Drug Rebate program to the tune of $465 million.

I’d like to share a time-tested lesson I’ve learned throughout my 38 years of oversight work in the U.S. Senate. When you smell smoke, there’s fire.

The EpiPen misclassification may be the tip of the iceberg.

As part of my EpiPen oversight, I requested additional misclassification data from the Office of Inspector General at HHS. 

As of early 2018, the OIG identified the names of 10 drugs that accounted for 68 percent of Medicaid reimbursements for potentially misclassified drugs in 2016.

The EpiPen and some of its variants are included within the group of 10 drugs, as well as a commonly prescribed antibiotic and a commonly prescribed drug for an under-active thyroid condition.

In a nut shell, it appears that some drug companies may be undermining the rebate program by misclassifying commonly prescribed drugs that can be found in medicine cabinets in households all across America.  

That’s wrong. And I’m going to do whatever I can to fix it. 

Recently, the FDA approved the first EpiPen generic. That’s a good step in the right direction. 

As a senior member of the Senate Finance Committee and chairman of the Senate Judiciary Committee, my sights are set squarely on lowering drug costs without compromising access to innovative cures and treatments delivered by America’s pharmaceuticals industry.

Through oversight and legislation, I am working to set things right.

That includes putting a stop to shenanigans that manipulate regulatory loopholes and unfairly extend monopolies over certain drugs.

This happens when a brand name and generic drug maker work in cahoots to delay the lower priced generic’s entry to the market.

For starters, my bill with Senator Amy Klobuchar of Minnesota would inject a healthy dose of Midwestern, common sense medicine into Big Pharma with our “Pay for Delay” bill. 

Our Preserve Access to Affordable Generics Act would end sweetheart deals between brand-name and generic drug makers that end up costing the American consumer and U.S. taxpayer an arm and a leg.

It would increase access to more affordable generic drugs, sooner rather than later.

Specifically, our bill would crack down on anti-competitive pay-off schemes that effectively rip-off taxpayers and consumers.

These so-called reverse agreements delay consumer access to generic drugs.

I am 100 percent certainty that our “Pay for Delay” bill would help lower drug prices for consumers.

That’s because generic drugs can be up to 90 percent cheaper than brand name drugs.

That’s a tremendous savings.

So, ending these pay-off agreements would gut artificially inflated prices consumers are paying for some prescription drugs.

Putting an end to these pay-off schemes will end the chokehold they put on the market. By doing so, we can restore timely access for more affordable generics to reach the market, boost competition, expand consumer choice and lower drug prices.

I’m also a cosponsor of a bill -- led by my friend Senator Pat Leahy -- that would inject another dose of bipartisan common sense into the pharmaceutical industry.

The Creating and Restoring Equal Access to Equivalent Samples Act (CREATES Act) seeks to stop anti-competitive practices that block lower cost generic drugs from the pharmacy store shelves.

It would help generic companies get the samples they need to manufacture equivalent products.

Right now, a common practice by bad actors in the industry prevents potential generic competitors from obtaining the samples they need to test their drugs or blocks them from participating in a shared safety protocol.

This practice of deny and delay is fueling deficit spending.

That’s because the taxpaying public shells out a whole lot more money to fill brand name prescriptions for veterans, the elderly and disabled.

The Congressional Budget Office has estimated that our bill would result in a $3.8 billion net decrease in the federal deficit.

Improving access to lower-cost generic drugs while preserving the incentives for innovation and intellectual property rights is a win-win solution.

Don’t just take my word for it. More than 80 organizations support its final passage, from the AARP to Consumers Union and the Taxpayers for Common Sense.

Our CREATES bill was approved in June by the Senate Judiciary Committee and has 30 Senate co-sponsors.

I’m also keeping tabs on proposed buy-outs and mergers in the pharmaceutical supply chain.

Without a doubt, increased market integration will impact consumers and taxpayers.

For example, the mergers between Cigna Corporation with Express Scripts Holding Company and CVS Health Corporation with Aetna may negatively impact consumer choice.

According to Kaiser Family Foundation, once completed, these two mergers would result in just four entities controlling 71 percent of all Medicare Part D enrollees and 86 percent of stand-alone drug plan enrollees.

Notwithstanding the consumer benefits of business integration that can include more innovation and cost-saving efficiencies, we can’t afford to turn a blind eye to the potential negative consequences that consolidation in the U.S. pharmaceutical supply chain may have in the marketplace.

I’ll wrap up my remarks today with this message for the American people.

President Trump made a promise to lower drug prices.

His administration is working to deliver on that promise.

His blueprint for bringing down prescription drug prices lays out four principles: boost competition, enhance negotiation, create incentives for lowering list prices, and bring down out-of-pocket costs.

Last month, he signed the Patient Right to Know Act into law. I co-sponsored the bill by Senator Susan Collins to ban “gag clauses” that keep pricing information from consumers at the pharmacy counter.

The new law prevents health insurance companies from prohibiting pharmacy providers from sharing pricing information with consumers. Now, a pharmacist can alert a customer if their co-payment would cost more than paying out-of-pocket, for example.

Along those lines, Senator Dick Durbin and I pushed for Senate passage of an amendment that supports existing Health and Human Services authority requiring drug makers to disclose the list price of prescription drugs in direct-to-consumer advertising.

The House rejected our amendment.

Nonetheless, HHS is moving forward with our concept to improve transparency by requiring companies to include drug prices in direct-to-consumer advertising.

Drug companies are already required to include possible side effects in their TV ads; adding on the list price would further improve consumer decision making.

The more information patients and health care providers have to make decisions on costs and outcomes, the better. 

Finally, I would like to say a word about another common sense solution to high drug prices.

For over twenty years, I have advocated for the safe re-importation of drugs from countries such as Canada. 

The late Senator John McCain, along with Senator Klobuchar introduced S. 92, the Safe and Affordable Drugs from Canada. I am a cosponsor of this bill and I plan to work to getting it enacted into law.

In today’s marketplace, there is a giant disconnect between consumers and the prices they pay for their prescription medicines.

To many of my constituents in Iowa, it is dog gone baffling. Americans have come to expect the best medicine when they need it most.

We need to improve the marketplace so that it functions properly to lower drug prices and raise the bar on outcomes.

Looking ahead, our Republican majority here in the United States Senate will keep up the momentum to deliver cost savings to the American people.

On my watch, I’ll continue working across the aisle to lower drug prices, restore competition and increase transparency in the pharmaceutical industry.

I welcome the incoming Democratic House Majority to join our efforts on behalf of the American taxpayers and consumers.

As Americans count our blessings during this season of thanksgiving, we give thanks for the gifts of friends and family who gather together around the table.

I’m thankful for good health and the opportunity to serve Iowans.

Along those lines, I will do my best to restore competition in the pharmaceutical market and to stop the gravy train that’s taking taxpayers for a ride.