Brown Fighting to Lower Drug Costs in Key Senate Bill

Senator Working to Include Provisions to Increase Transparency for Pharmacy Middle-Men in Bill Expected to Pass Senate Committee This Week

WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) introduced amendments today to a key drug pricing bill that is expected to be voted out of the Senate Finance Committee tomorrow. Brown is pushing for the bill to include provisions to increase transparency for Pharmacy Benefit Managers – or PBMs, which operate as middle-men among drug manufacturers – as well as insurance companies and pharmacies. PBMs are currently not required to disclose all discounts they receive or pass those discounts on to customers.

“Pharmacy middle-men shouldn’t be pocketing secret kickbacks instead of passing discounts onto customers. By requiring more transparency, we can hold the industry accountable to Ohio taxpayers and patients, and support local Ohio pharmacies,” Brown said. “At the same time, we can’t forget that its drug companies who set the prices and we must do more to hold them accountable.”

The amendments Brown offered today would:

  • Prevent Pharmacy Benefit Managers from “clawing back,” or taking money that insurance companies pay to community pharmacies and pocketing it for themselves. This practice causes major challenges for pharmacists and small businesses across Ohio and has been under major scrutiny by state lawmakers.
  • Require Pharmacy Benefit Managers to report rebates and discounts they get from drug manufacturers and pass a minimum percentage of those discounts onto customers. Right now, there is no way to know for sure what discounts PBMs receive, let alone what percentage of that discount is passed on to consumers. Brown originally introduced this provision in his legislation with Senator Ron Wyden (D-OR) last congress. Their Creating Transparency to Have Drug Rebates Unlocked (C-THRU) Act would take several steps to improve transparency and ensure people in Medicare receive a fair share of rebate savings. It would require PBMs to disclose the aggregate amount of rebates they receive from pharmaceutical companies, and what proportion of those rebates go to Americans in Medicare. These disclosures would be publically available on CMS’s website.

Brown is also introducing the following additional amendments to improve the bill and further lower drug costs for Ohioans by targeting the pharmaceutical companies who ultimately set the prices.  

Medicare Negotiation and Competitive Licensing Act

Brown will be introducing an amendment to the Senate Finance Committee’s package based on legislation he introduced earlier this year with Congressman Lloyd Doggett (D-TX) to address the prescription drug affordability crisis.

  • Their Medicare Negotiation and Competitive Licensing Act would authorize the Secretary of Health and Human Services (HHS) to negotiate drug prices and, if drug companies refuse to negotiate in good faith, it would enable the Secretary to issue a competitive, compulsory license to another company that is willing and able to produce the medication as a generic.
  • Big pharmaceutical companies often use scare tactics in order to maintain the highest profits of any industry. Prescription drug companies have previously made threats against negotiations bills, stating that if they were forced to negotiate more competitive prices, they would simply refuse to sell its drugs to people on Medicare. This industry practice puts profits over people. The Brown-Doggett bill stipulates that if pharmaceutical companies refuse to agree to a reasonable price on a given medication, the Secretary of HHS could issue this competitive, compulsory license to another company that will offer the drug at a price that’s fair to Medicare beneficiaries and taxpayers.
  • Brown also included this provision in the Affordable Medications Act he introduced in June. This comprehensive legislation would hold large pharmaceutical companies accountable for high prices and bring down the costs of prescription drugs.

Stop Price Gouging Act 

Brown will also be introducing an amendment to the Finance Committee bill based on legislation he cosponsored with Senator Kirsten Gillibrand (D-NY) earlier this year to stop price gouging.

  • The Stop Price Gouging Act would penalize pharmaceutical companies that engage in price gouging without cause, leading to price spikes for patients who rely on medication to treat diseases ranging from cancer to addiction. The Senators’ bill would hold drug companies accountable for large price increases and result in billions of dollars in savings for taxpayers.
  • The bill would require drug companies to report increases in drug prices and justify the increase, and penalize drug companies that engage in unjustified price increases with financial penalties proportionate to the price spike. 
  • Under current law, pharmaceutical corporations can increase the price of their products without justification. Brown and Gillibrand introduced this bill last Congress and have continued fighting to pass it.
  • Brown also included this provision in the Affordable Medications Act he introduced in June. This comprehensive legislation would hold large pharmaceutical companies accountable for high prices and bring down the costs of prescription drugs.

End Taxpayer Subsidies for Drug Ads Act

Brown will introduce an amendment to the Finance Committee bill based on legislation he cosponsored with Senator Jeanne Shaheen (D-NH) as well, which would prohibit pharmaceutical drug manufacturers from claiming tax deductions for consumer advertising expenses.

  • Under current law, drug manufacturers are allowed to deduct the cost of advertising expenses from federal taxes. The End Taxpayer Subsidies for Drug Ads Act would eliminate this tax deduction for drug advertising costs, ensuring that taxpayer dollars are not used to subsidize drug advertisements.
  • Advertising expenses by pharmaceutical drug manufacturers have more than quadrupled over the past two decades, rising from $1.3 billion in 1997 to $6 billion in 2016. In that same time period, advertising from drug companies has increased from 79,000 ads to 4.6 million ads, including 663,000 TV commercials. Economists have estimated that nearly one third of the growth in drug companies’ spending can be attributed to the increase in advertising for prescription drugs.

Provision to Reduce the Exclusivity Period for Biologics

Finally, Brown will introduce an amendment to the Finance Committee bill based on provisions he introduced in previous congresses to reduce the exclusivity period for biologics from 12 to 7 years.

  • In the same way that generics entering the market helped increase competition and boost access to more affordable prescription drugs, Brown’s bill would make clinically safe and effective versions of biologics called “biosimilars” available, providing additional competition in the marketplace and making life-saving drugs more affordable for consumers.
  • Biologics – drugs made using living organisms – currently have the longest exclusivity period of any approved pharmaceutical, which has a chilling effect on innovation, limits competition, and prevents the development and marketability of biosimilars. Allowing more biosimilars to enter the market will save patients, taxpayers, and hospitals money.
  • Brown’s PRICED Act would reduce the exclusivity period for biologics to ensure that more of these drugs can be developed and made available to consumers faster.

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