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Drug prices: Why won't feds flex power, get better deals, Pallone asks

October 11, 2019
In The News

LONG BRANCH - The federal government should be allowed to negotiate the cost of brand name drugs with their manufacturers, U.S. Rep. Frank Pallone told seniors here Monday in a bid to build support for a bill he is sponsoring.

Pallone, D-N.J., and chairman of the House committee that oversees health care legislation, said the bill would bring U.S. drug costs more closely in line with other countries, even as it runs into fierce opposition from drug companies that also are in his district, which stretches from Monmouth to Middlesex counties.

"I hear about this more than any other issue," Pallone said. "People talk about impeachment, foreign policy, but more than any other issue, I hear about this — not only with seniors, but the public at large."

Pallone appeared at the Long Branch Senior Center in front of a friendly audience. He was joined by state Sen. Vin Gopal, Assemblywoman Joann Downey and Assemblyman Eric Houghtaling, all Democrats representing Monmouth County, along with consumer advocates.

Pallone would appear to face a difficult road turning his legislation into law. But he is tapping into an issue that could resonate with voters. Health care costs at the beginning of the year were their second-biggest concern, trailing only the economy, according to a Pew Research poll.

Some consumers are in the position of Joseph Richichi, who recently was advised by his doctor to take a new drug to treat depression. The drug, however, was protected by a patent, which prevents competitors from introducing a generic version for as long as 20 years.

"I didn't even ask (how much)," Richichi, 66, of Long Branch, said. "When they told me, 'It's very expensive,' I know it's going to be hundreds of dollars. I said, 'Never mind.'"

The price of the most widely used prescription drugs increased on average 4.2% in 2017, twice the rate of inflation, a study by AARP, a trade group representing seniors, found.

Consumers also are wrestling with the price of drugs that lost their patents long ago. Insulin, a drug to treat diabetes, was discovered in the early 1920s, but its price doubled between 2012 and 2016, according to the Health Care Cost Institute, a research group.

As a result, advocates said, some consumers are finding prescription drug prices out of reach; nearly a quarter of New Jerseyans stopped taking medication as prescribed because of the cost, AARP found.

"Did any of you ever buy a car and not negotiate price?" said Maura Collilnsgru, health care program director for New Jersey Citizen Action, a consumer advocacy group. "Did you ever buy things and say, OK, whatever you want we'll pay? That's what we're currently doing with prescription drugs."

Pallone's proposal would:

  • Allow the federal government to negotiate prices on at least 25 — and as many as 250 — of the most costly drugs that don't have a generic competitor. The price would be available to all health care purchases, not just Medicare.
  • Create a maximum price during negotiation based on the average cost of the drug in six countries: Australia, France, Canada, Germany, the United Kingdom and Japan.
  • Penalize drug companies that refuse to negotiate or reach a settlement at least 65% of the gross sales of the drug.
  • Create a $2,000 out-of-pocket limit for Medicare beneficiaries.

Pallone plans to take up the bill on the Energy and Commerce Committee as soon as next week. But there is no shortage of obstacles.

President Donald Trump, who hasn't been shy bashing drug companies, could be an unlikely ally, but he faces an impeachment inquiry from House Democrats. And Republicans, who control the Senate, haven't signed on, Pallone said.

The drug industry also is preparing for a battle. It employed more than 65,000 workers in New Jersey in 2015, according to the HealthCare Institute of New Jersey, a trade group that represents the state's drug makers.

It long has said the patent protection helps drug makers recoup the money they spend on research and development and paves the way for new breakthroughs.

"While HINJ and our member companies support Chairman Pallone’s efforts to lower patients’ health care costs, this bill would utterly devastate medical innovation, pose the danger of decimating New Jersey’s work force and economy, and would do little to help patients afford their health care," said Dean J. Paranicas, the group's president and chief executive officer.

Pallone, whose district includes big pharmaceutical companies including Johnson & Johnson in New Brunswick, said U.S. consumers have been unfairly shouldering the burdensome cost of innovation.

"Let me assure you they're not going to go broke," Pallone said.