A bi-partisan group of Senators and Representatives, led by Tammy Baldwin and John McCain introduced a bill earlier this month requiring drug makers to justify big price hikes. Any time a pharmaceutical company wanted to raise the price of a drug substantially, it would need to justify the increase to the U.S. Department of Health and Humans Services (HHS) a month in advance.
The Fair Accountability and Innovative Research Act or FAIR Act would mean that drug companies had to disclose to HHS their research and development, manufacturing and marketing and advertising costs as well as their net profits for a particular drug before they could hike up a drug price more than 10 percent. HHS would then be expected to disclose this information, excluding proprietary and confidential information, to the public within 30 days.
The theory behind the legislation is that transparency will drive at least some accountability in the drug marketplace. But, the bill would not require pharmaceutical companies to secure government approval for a drug price hike. And, it will do nothing to reduce prices on drugs already in the marketplace or limit prices on drugs newly entering the marketplace.
According to a recent Kaiser Family Foundation poll, most Americans, 73 percent, believe that drug prices are too high and blame the drug companies for these excessive prices. In 2015, the U.S. spent $425 billion on prescription drugs, 16.7 percent of all health care spending. And because of the monopolies Congress has conferred on pharmaceutical companies for many life-saving drugs, they are expected to raise prices even higher. In 2020, we are projected to spend $600 billion on prescription drugs.
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