At the behest of Sen. Bernie Sanders and Rep. Elijah Cummings, the Department of Health and Human Services’ inspector general recently released a report that found rising generic drug prices have cost taxpayers an additional $1.4 billion over the last decade. By rapidly increasing drug prices faster than the rate of inflation, the report also revealed that pharmaceutical companies collecting Medicaid reimbursements cost taxpayers more than $700 million in 2013 and 2014 alone.
In October 2014, Sen. Sanders and Rep. Cummings launched an investigation into the recent epidemic of drastically increasing drug prices. On February 24, Sanders and Cummings sent a letter to the Office of Inspector General requesting a thorough examination of the recent price hikes and the effects these price increases have had on Medicare and Medicaid. The Department of Health and Human Services released their report this week revealing that price gouging has cost taxpayers $1.4 since 2005.
“It is unacceptable that Americans pay, by far, the highest prices in the world for prescription drugs,” asserted Sanders. “The United States is the only major country on earth that does not in one form or another regulate prescription drug prices and the results have been an unmitigated disaster. This report further demonstrates that we need a new approach to stop skyrocketing drug prices in this country.”
By reviewing the top 200 generic drugs, as ranked by Medicaid reimbursement, from 2005 to 2014, the inspector general examined a total of 869 drugs. In studying the quarterly average manufacturer prices for those drugs, the report found that the prices of top-selling generic drugs rose faster than inflation 22% of the time. Although rising drug prices cost taxpayers $39 million in 2005, the prices increased so rapidly that the cost to taxpayers rose to over $464 million in 2014.
“The IG report confirms that skyrocketing drug prices are not just an isolated problem caused by one or two CEOs motivated by greed, but a systemic injustice that enriches corporate executives at the expense of Americans in desperate need of their medications. Unfortunately, House Republicans have not sent a single letter to a single drug company requesting a single document to investigate these abuses,” said Cummings.
While the top three pharmaceutical companies made a combined $45 billion in profits last year, one in five Americans – 35 million people – were unable to afford to fill their prescriptions. Instead of focusing on research and development, these corporations spent more on sales and marketing while increasing drug prices over 1,000%.
In September, Sanders and Cummings condemned the drug price hikes while introducing legislation authorizing the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies to bring down costs for Medicare drug benefits. The Prescription Drug Affordability Act of 2015 includes tougher penalties for drug companies that commit fraud and bans the practice of brand name drugmakers paying competitors to keep lower-priced generic substitutes off the market. The bill also lowers barriers to the importation of lower-cost drugs from Canada.
At the request of Sanders and Cummings, Inspector General Daniel Levinson will conduct a follow-up study analyzing the impact of generic drug price increases on the Medicare Part D program. On Wednesday, Sanders took to Twitter and wrote, “The skyrocketing level of income and wealth inequality is not only grotesque and immoral, it is economically unsustainable.”
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