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Calls for drug price investigation

The US GAO has been asked to investigate prescription drug pricing and establish an ongoing monitoring programme

Leaders of two powerful Congressional committees in the US have asked the Government Accountability Office (GAO) to investigate prescription drug pricing trends and develop a proposal for an ongoing monitoring programme for pharma pricing practices.

The requests to the GAO were made in a letter signed by Charles B Rangel, chair of the House Ways and Means Committee; Henry A Waxman, chair of the Energy and Commerce Committee; Pete Stark, chair of the Ways and Means Health Subcommittee; and John Lewis,chair of the Ways and Means Oversight Subcommittee.

Lawmakers' action comes on the heels of a study released by AARP, the membership group for older Americans, which showed that drug prices have been rising steeply despite a falling rate of general inflation, and a front-page article in The New York Times claiming that drug firms have been artificially inflating prices in preparation for healthcare reform provisions that could signal price cuts.

The AARP report, produced by the group's Public Policy Institute, found that branded drug prices have spiked 9.3 per cent since October 2008. AARP executive vice president, John Rother, issued a statement to coincide with the report's release saying that the drug industry "should be embarrassed when it sees its own price increases put side-by-side with the general inflation rate".

Analysis in The New York Times suggests that savings from a highly publicised and widely hailed agreement struck between industry and government earlier this year could be largely cancelled out by the price increases. That deal promised to cut $8bn annually from US spending on prescription drugs through rebates to senior citizens and government programmes.  

Pharmaceutical Research and Manufacturers of America (PhRMA) has responded by insisting that price increases simply reflect the pressures in the marketplace. "Companies make price adjustments independently as the result of market forces, which include everything from patent expirations to the huge, sunk R&D costs which typically exceed $1bn for a single medicine, as well as the ability of powerful purchasers to obtain large savings, benefiting patients," PhRMA senior vice president, Ken Johnson, said in a statement. "It's pretty obvious that the calls to hold hearings or involve GAO are based on the misleading use of statistics and sensationalised media reports."

PhRMA cited a statistic from the Consumer Price Index suggesting that prescription drug prices actually grew by just 2.7 per cent during the 12-month period ending in September, which the group said is "completely in line with current medical inflation, which grew to 3 per cent during the period." 

26th November 2009

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