Brown Secures Provisions to Lower Drug Costs in Key Senate Bill

Senator Secured Inclusion of Provisions that will Increase Transparency for Pharmacy Middle-Men in Bill, Ban Spread Pricing; Senate Finance Committee Passes Bill & Sends it to Floor Brown to Continue Fighting to Let Medicare Negotiate Drug Prices, End Big Pharma Price Gouging

WASHINGTON, DC – U.S. Senator Sherrod Brown (D-OH) today announced that he secured the inclusion of key provisions in the drug pricing bill that passed out of the Senate Finance Committee. Brown secured pieces of his amendments that increase transparency for Pharmacy Benefit Managers – or PBMs, which operate as middle-men between drug manufacturers, insurance companies, and pharmacies. PBMs are currently not required to disclose all discounts they receive or pass full discounts on to customers. Brown’s original amendments would have gone further to ensure discounts are passed onto customers, but he said increased transparency is an important first step toward that goal. And Brown secured a commitment from the leaders of the Committee to continue working with him on this issue.

Brown also offered amendments to lower drug costs, including allowing Medicare to negotiate drug prices and stopping drug companies from price gouging consumers. Those amendments were not accepted into the final committee bill, but Brown vowed to keep fighting to get them passed into law.

“Pharmacy middle-men shouldn’t be pocketing secret kickbacks instead of passing discounts onto customers. Requiring more transparency is an important first step toward holding the industry accountable to Ohio taxpayers and patients, and supporting local Ohio pharmacies,” Brown said. “At the same time, we can’t forget that its drug companies who set the prices and I’m going to keep fighting to put an end to their price gouging.”

The Amendments Brown Secured to today’s bill would increase oversight of Pharmacy Benefit Manger’s by:

  • Requiring PBMs to publicly report data, including: information on what rebates and discounts they get from drug manufacturers and how much they pay to pharmacies. Brown’s original amendment would have gone a step further by requiring PBM’s to pass a minimum percentage of the discounts they receive onto customers. But the transparency measures included in the bill are an important step toward that goal.
  • Requiring the Secretary of HHS to provide clear guidelines to PBMs and pharmacies on the abusive PBM practice of “claw backs” or taking payments that have been made by insurance companies to pharmacies back from the pharmacy retroactively. This will help hold the PBMs accountable and provide certainty to Ohio’s community pharmacies so they can better operate their businesses and serve Ohio patients. Brown’s original amendment would have ended the practice of “clawing back” payments causes major challenges for pharmacists and small businesses across Ohio and has been under major scrutiny by state lawmakers. But the measures Brown secured in today’s bill are an important step toward reining them in.
  • Banning PBMs from skimming money off the top of Medicaid payments states make to pharmacies, often referred to as ‘spread pricing.’

Brown also introduced several measures to improve and strengthen the bill that Republicans refused to accept into the Committee’s legislation, including an amendment raised during the markup to allow the Secretary of HHS to negotiate drug prices in Medicare.

Brown said he would continue fighting to secure the passage of these provisions, which would further lower drug costs for Ohioans by targeting the pharmaceutical companies who set the prices:

Medicare Negotiation and Competitive Licensing Act

Brown introduced 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 also introduced 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. Brown will continue fighting for this provision. This amendment would have helped protect all Ohioans from price spikes, building on provisions in the Senate Finance Committee mark that dis-incentivize price spikes only within Medicare and Medicaid.

  • 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 introduced an amendment to the Finance Committee bill based on legislation he cosponsored with Senator Jeanne Shaheen (D-NH), and said he would continue fighting for this provision as well. This measure 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 introduced 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. Brown will continue fighting for this provision.

  • 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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