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Letter Supporting the Fair Accountability, and Innovative and Research Drug Pricing Act of 2016

September 16, 2016

The Honorable Tammy Baldwin
717 Hart Senate Office Building
Washington, D.C. 20510

The Honorable John McCain
218 Russell Senate Office Building
Washington, DC 205

Dear Senators Baldwin and McCain:

On behalf of the National Committee to Preserve Social Security and Medicare’s millions of members and supporters, I write to endorse the Fair Accountability, and Innovative and Research Drug Pricing Act of 2016, which would require drug manufacturers to be more transparent about their justification for increases in drug prices over 10 percent. Manufacturers would be required, among other things, to report their spending on a drug’s research and development as well as their profits on a drug each year since its approval.

Skyrocketing drug prices are having an impact on seniors’ pocket books and on the Medicare program’s finances. A Government Accountability Office study found that nearly two-thirds of new Part B drugs had expenditures per beneficiary in excess of $9,000 in 2013.

Under Medicare Part B coinsurance requirements, beneficiaries who use expensive drugs shoulder 20 percent of the costs of their drugs. And there is no out-of-pocket cap for Part B expenses. While many beneficiaries have supplemental insurance to help pay for their out-of-pocket costs, the impact on beneficiaries who need these drugs and who are without supplemental coverage can be devastating. In 2013, beneficiaries' share of the cost of expensive new drugs ranged from $1,900 to $107,000 per drug.

According to the Medicare Trustees Report, in 2015, per capita benefits for Part D increased 15 percent, because of price increases for brand name drugs and the high use of the new hepatitis C drugs. In 2016 per capita benefits are projected to increase 14.6 percent. These trends are simply unsustainable.

We applaud your efforts to require manufacturers to provide more information about drug price increases. Transparency is a good first step toward understanding, and ultimately taming, the problem of spiraling drug costs.

Sincerely,

Max Richtman
President/CEO



   

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