Senate Aims to Stop Firms From ‘Buying Up Drugs and Jacking Up Prices’


Pharmaceutical executives say they worry that Mr. Trump will soon assail a drug company on Twitter, as he has criticized Boeing on the cost of Air Force One upgrades and Lockheed Martin on the cost of the F-35 fighter.

And the Senate report provides potential ammunition.

“Our report does not recommend that the government get into the business of setting prices for prescription drugs,” said Senator Susan Collins, Republican of Maine, who led the investigation as chairwoman of the Aging Committee. “We think that would have a harmful impact on the pipeline of innovative drugs.

“On the other hand,” she said, “I don’t think we can ignore the market failures that have occurred. The answer is to figure out how we can revitalize the market so that generic drug producers have incentives to compete with companies that are buying up drugs and jacking up prices to make quick, exorbitant profits.”

Under the business plan the panel examined, companies acquire “a sole-source drug” made by a single manufacturer. Companies typically seek out the best drug available for a condition that affects a relatively small number of patients, then “maximize profits by increasing prices as much as possible,” the report said.

Because the drug is the “gold-standard treatment,” doctors continue to prescribe it, and the market, being relatively small, does not attract competitors. This means the supplier can exercise “monopoly power over its pricing,” the report said.

The committee reviewed more than a million pages of documents obtained from four drug companies and found that investors had “pushed and pressured” company executives to increase prices, often at the expense of patients.

“A new breed of pharmaceutical companies have become very good at targeting drugs whose prices can be manipulated without generic competition,” said Senator Claire McCaskill of Missouri, the senior Democrat on the Aging Committee. In some cases, she said, they have used “patients as hostages.”

In its investigation, the Senate panel scrutinized price increases by Turing Pharmaceuticals, which sells Daraprim, for treatment of toxoplasmosis, a life-threatening parasitic infection; Retrophin, which sells Thiola tablets, to prevent kidney stones in patients with a rare genetic disorder; Rodelis Therapeutics, which briefly held the rights to Seromycin, a tuberculosis drug; and Valeant Pharmaceuticals International, which markets lifesaving heart drugs and medicines to treat Wilson’s disease, an inherited disorder that can cause severe liver and nerve damage.

Valeant’s stock price has plunged in the last year, and the company acknowledged at a committee hearing last spring that it had “made mistakes” in pricing its drugs.

The committee report recommends several steps to “rein in price spikes in off-patent, decades-old drugs purchased by companies that did not bear the drugs’ research and development costs.”

Congress, it said, should try to increase competition by passing legislation to speed the review and approval of lower-cost generic drugs. Federal officials should be required to act within 150 days on applications for the approval of certain generic drugs, the report said.

To encourage drug makers to enter markets where high-priced brand-name products have no competition, it said, the government should offer vouchers promising expedited “priority review” of certain generic drugs.

Under a 2007 law, the Food and Drug Administration has ordered many pharmaceutical companies to adopt special safety measures for particular drugs. The Senate report said brand-name drug companies had abused these drug-safety programs to prevent generic drug companies from obtaining samples of their products. Generic companies need the samples to conduct studies required for the approval of generic drugs.

The report calls for legislation to ensure that developers of generic drugs can “obtain access to samples of the drug needed to show” that their products perform just like the brand-name drugs.

In its report, the Senate Aging Committee also expressed concern about “patient assistance programs” offered by drug companies to help patients pay for high-cost drugs.

Such programs, it said, seem altruistic, but are often self-serving because they allow drug makers to “subsidize the purchase of their own products,” steering patients toward expensive drugs and reducing the likelihood that patients will complain about “outrageous price increases.”

“Patient assistance programs may be more about profit than charity,” the report said.

The report also said Congress should give the F.D.A. authority to allow imports of medicines in narrowly defined circumstances, when consumers face sharp, sudden increases in the price of off-patent drugs that have no competition.

The imports would be allowed only from countries with drug safety standards similar to those in the United States and would end “as soon as the monopoly was broken up,” it said.

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