House Report Slams Drug Pricing, Patent Manipulating

A just released U.S. House Oversight and Reform Committee staff report has found that drug companies have “raised prices relentlessly for decades while manipulating the patent system and other laws to delay competition from lower-priced generics.” The report, which examined 12 drugs from 10 companies, said they targeted the U.S. market for higher prices, even while cutting prices in other countries “because weaknesses in our health care system have allowed them to get away with outrageous prices and anticompetitive conduct.”

The report found that the companies “collectively raised prices more than 250 times on the 12 drugs examined.” Evidence also suggested that company executives made aggressive price increases to meet ever-increasing revenue targets and earnings goals. “All ten companies have compensation structures that tie incentive payments to revenue and other financial targets, and several companies directly tied incentive compensation to drug-specific revenue targets,” it said.

The report also took issue with the companies’ alleged abuse of the patent system and FDA market exclusivities to suppress competition. “Collectively, the companies in the committee’s investigation have obtained more than 600 patents on the 12 drugs examined, which could potentially extend their monopoly periods to a combined total of nearly 300 years,” it said.

The companies were also found in the report to use patient assistance programs as a public relations tool to boost sales. “The committee’s investigation uncovered new evidence that companies emphasized the significant returns on investment from these programs in the form of increased sales, particularly for drugs approaching loss of exclusivity,” it said. “Internal documents show that companies view these programs as an important public relations tool, but that companies’ spending on patient assistance programs is minimal compared to the enormous amount of revenue brought in by these drugs.”

Additionally, the report also examined insulin products manufactured by Eli Lilly, Novo Nordisk, and Sanofi, and found that their strategies included manipulating the patent system and FDA marketing exclusivities, pursuing tactics to switch patients to new product formulations before losing exclusivity, and engaging in “shadow pricing — raising prices in lockstep with competitors — which keeps prices high.”