May 19, 2017

The Honorable Tammy Baldwin
717 Hart Senate Office Building
Washington, DC 20510

The Honorable John McCain
218 Russell Senate Office Building
Washington, DC 20510

The Honorable Jan Schakowsky                                                                                                  
2367 Rayburn House Office Building                                                                                                      
Washington, DC 20515                                                                                                                                       

Dear Senators Baldwin and McCain and Representative Schakowsky:

On behalf of the National Committee to Preserve Social Security and Medicare’s millions of members and supporters, I write to endorse the FAIR Drug Pricing Act.  This legislation would require drug manufacturers to submit a price justification report 30 days before increasing the price of certain drugs by 10 percent or more over 12 months or 25 percent or more over 36 months.

Your legislation would also require drug manufacturers to report on their research, development, marketing, and advertising spending, as well as profits related to a drug.  This information would enable buyers to negotiate more competitive prices.

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 per beneficiary expenditures of more than $9,000 in 2013. According to the Commonwealth Fund, Medicare beneficiaries spent an average of $3,024 per year on out-of-pocket costs—not including premiums—of which prescription drugs accounted for 25 percent.

Under Medicare Part B coinsurance requirements, beneficiaries who are prescribed expensive drugs must pay 20 percent of their costs. 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. According to the Department of Health and Human Services Office of the Inspector General, Federal payments for Part D catastrophic coverage topped $33 billion in 2015, more than three times the amount paid in 2010.

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.


Max Richtman