On January 14, the House Oversight Committee announced an investigation into 18 branded drugs, produced by 12 biopharmaceutical companies. The drugs targeted by the investigation have a significant share of patients covered by Medicare Part D, as well as drugs that have had significant price increases over the past five years. Some of the medications under investigation are available in generic formulations.
The Committee claims it seeks to determine why drug companies have raised prices, how they use the proceeds from higher prices, and what steps could reduce prices. It also seeks information on manufacturers’ corporate strategies used to maintain market share and pricing power. There will be a hearing on this topic on January 29. While the announcement named the 18 drugs under scrutiny, the investigation and related hearing could be broadly relevant for life science companies.
What This May Mean for Drug Companies
- As a result of the uncertainty around the investigation and hearing, some biopharmaceutical companies named in the investigation have already seen their stock price drop since the announcement. More scrutiny means this is likely to happen again.
- Drug companies are likely to face criticism in press coverage related to the investigation and hearing.
- The hearing announced this week is the first step in what will be a series of hearings that will likely cover specific themes, such as drugs largely paid for by other parts of Medicaid or drugs for which patents have expired but there are no generics available.
- This investigation follows a midterm election during which healthcare and drug prices were high priorities for voters. Drug companies can expect even more attention on and scrutiny of prices as members of Congress and the president propose relevant legislative and administrative steps.
Companies that anticipate making price adjustments should keep a close eye on these hearings – and must be prepared to discuss the value that their medicines continue to deliver to patients and the healthcare system. This is particularly relevant for medicines that have a high utilization among public payers.
Companies with questions should email ReputationRiskManagementPractice@syneoshealth.com to discuss how to be best positioned on pricing and value at a time when both are in the spotlight.