WASHINGTON -- U.S. Rep. Diana DeGette threatened pharmaceutical company executives with government intervention Wednesday during a congressional hearing into the rising price of insulin.
“I think we can all agree that the system is broken,” DeGette, D-Denver, said about the method the companies use to set their insulin prices.
DeGette, a Denver Democrat, is chairwoman of the House Energy and Commerce subcommittee on oversight and investigations, which held the hearing.
Insulin is a hormone produced by the pancreas that helps lower the body’s glucose, or sugar, levels in the blood.
For diabetics, their bodies’ insulin production is impaired. They need to use manufactured insulin produced by pharmaceutical companies to avoid sickness or death.
Some members of Congress accuse the companies of raising insulin prices beyond the ability of many Americans to pay for it, often forcing them to choose between buying insulin or buying groceries for themselves and their families.
Despite the fact the formula for making insulin has not changed since the 1990s, “The price of insulin has doubled since 2012 after nearly tripling in the past 10 years,” DeGette said.
About 7-1/2 million Americans rely on insulin to avoid illness or death. One of them is DeGette’s daughter.
Other patients from Colorado include a woman DeGette identified only as “Sisera” who pays $700 a month for the medication despite the fact she can barely afford it.
“People have to forego paying their bills,” DeGette said.
Corporate executives at the hearing blamed a variety of factors for the skyrocketing costs, including rebates to pharmacy benefit managers, research and development costs and intense competition. Others said they were uncertain why the costs were out of control.
Much of the suspicion fell on rebates paid to pharmacy benefit managers and the lack of transparency between the companies that set them.
“There’s a significant demand for rebates,” said Doug Langa, president of pharmaceutical company Novo Nordisk Inc.
Pharmacy benefit managers (PBMs) refer to third-party administrators of prescription drug programs for commercial health plans, Medicare and federal and state employee plans. They handle price negotiations, insurance claims and distribution of prescription drugs.
In theory, they aggregate the buying power of participating organizations, allowing health plan sponsors and patients to obtain lower prices for prescription drugs. They make money by collecting fees from insurance plans and rebates from drug manufacturers.
However, PBMs do not disclose the prices they negotiate for prescription drugs, allowing them to resell drugs higher than the prices they negotiated with manufacturers.
Some members of Congress said the secret negotiations create a lack of transparency and suspicions about their pricing, particularly for insulin. Three PBMs -- Express Scripts, CVS Health and OptumRx of United Health Group -- control about 78 percent of the U.S. market and cover about 180 million patients who receive prescription drugs.
In January, the U.S. Department of Health and Human Services recommended removing regulatory rules that allowed PBMs to seek rebates from drug manufacturers.
“The pharmaceutical companies had $323 billion in profits last year,” DeGette said. “The PBMs had $23 billion in profits last year. Everybody’s making a profit.”
She mentioned the example of Eli Lilly and Co.'s insulin drug Humalog. In 2001, it cost $35 a bottle. Now, the same formula for Humalog costs $275 a bottle, she said.
Members of Congress plan to work with the pharmaceutical companies to develop a plan to bring down the drug costs.
“This is not optional and it is going to happen,” DeGette told the corporate executives.
She was joined in her criticism of the drug companies by other members of her subcommittee.
“Things have gotten out of control,” said Rep. John Sarbanes, a Maryland Democrat. “You’re too big and the lack of transparency allows you to manipulate the system at the expense of the patient.”
Several of the corporate executives said they offered programs to reduce insulin prices for patients based on their ability to pay. The members of Congress were largely unconvinced.
“Do you recognize that this pricing system and model is causing people to die?” asked Rep. Nanette Diaz Barragan, a California Democrat.
Amy Bricker, a vice president for Express Scripts, said, “We recognize that there are patients falling through the cracks.”
Barragan said, “It’s because of profits, it’s because of greed.”