Newly empowered Democrats who’ve taken control of the House of Representatives have launched a probe into drug prices as the political climate darkens for large pharmaceutical makers.
A key House watchdog panel has sent a letter to 12 large pharmaceutical companies seeking information on how they determine price increases and aim to maintain market share.
“For years, drug companies have been aggressively increasing prices on existing drugs and setting higher launch prices for new drugs while recording windfall profits,” wrote Rep. Elijah Cummings, chairman of the House Committee on Oversight and Reform and a Maryland Democrat.
“The goals of this investigation are to determine why drug companies are increasing prices so dramatically, how drug companies are using the proceeds, and what steps can be taken to reduce prescription drug prices,” he said.
Among the targets: Amgen AMGN, -1.68% , AbbieVieABBV, -2.64% Eli Lilly LLY, -1.49% Johnson and Johnson JNJ, -1.25% Novartis NVS, -1.30% Pfizer PFE, -1.47% Sanofi SNY, -1.96% and Teva Pharmaceutical TEVA, +0.43% .
AbbVie is the maker of arthritis pain reliever Humira, AstraZenica is the creator of cholesterol drug Crestor and Pfizer is the developer of heartburn alleviant Nexium.
Drug stock fell in Monday trades, with losses ranging from 1% to 3%.
There’s already several bills floating around in Congress, from both Democrats and Republicans, that seek to limit price increases in prescription drugs. President Trump has made it one of his big causes, and in a harshly divided Washington, it’s one of the few issues with the potential to unite both parties.
The Republican-controlled Senate means any action would need broad political support.
The federal government pays tens of billions of dollars annually for drugs used by older Americans via Medicare. Drug prices have risen much faster than the rate of inflation in most years, leading to public and political pressure to reduce costs.
With political pressure mounting, drugmakers evidently have become more careful about price increases.
Prescription drug prices actually fell 0.6% in 2018 to mark the first drop in 46 years, according to the consumer price index. It’s only the second decline since the government began keeping track in 1970. Price rose almost 3% in 2017 and 6.2% in 2016, the CPI shows.
Other studies show an even bigger increase in drug prices, particularly the most widely used and popular ones.
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