Congressman Elijah Cummings

Federally approved generic drugs are critically important to the health of the American people.  These federally regulated, lower-cost generic drugs now account for 86 percent of all prescriptions dispensed in the United States, saving Americans billions of dollars every year and reducing our nation’s healthcare costs.

In recent months, however, and sometimes virtually overnight, some generic drug manufacturers have increased their prices to our pharmacies, hospitals, and consumers by hundreds and even thousands of percent.  Confronted by sticker shock, too many Americans who need these drugs cannot afford to purchase the medicines that their doctors have recommended.

To better appreciate the urgency of this problem, consider just a few examples.

The retail price for the tablet form of albuterol sulfate climbed by more than 3,000 percent between November 2012 and June 2014.  Since I must use the inhaler version of this prescription drug for an asthma condition, I know how important it is for people with lung conditions.

Likewise, many of our neighbors use a drug called Digoxin to treat their heart conditions.  In 2012, this drug cost 11 cents per tablet, but in June of this year, the price per tablet had risen to $1.10.

Why did this happen?

In 2012, three companies were manufacturing Digoxin, but one stopped producing the prescription drug.  One of the remaining companies, Lannett, responded to the reduced supply by increasing its price for Digoxin by more than 1000 percent.

The trade association that represents generic drug manufacturers contends that price spikes like this are rare.

Yet, during a hearing on rising generic drug prices held by Vermont Senator Bernard Sanders at which I testified, we also received testimony illustrating that the problem is far more broadly based.

According to Pharmacist Rob Frankil of the National Community Pharmacists Association, “about a year ago, pharmacies began noticing a rash of dramatic price increases for many common, previously low-cost generic drugs.”

The negative impact upon patients has been profound, especially for those who are uninsured, on Medicare (and in the prescription drug “donut hole”) or in high-deductible insurance plans.

Industry experts contend that there often are multiple, unrelated forces that can lead to substantial price increases – like drug ingredient shortages, industry “consolidation,” and production slowdowns due to manufacturing problems.

Although these are important contributing factors, we should not forget the example of Digoxin and the price spike imposed by its manufacturer, Lannett.

Lannett CEO Arthur Bedrosian reportedly told investors that “We are an opportunistic company.  We see opportunities to raise prices.  Competitors drop out of products.  There are shortages in the marketplace that sometimes drive it.”

In short, the reason that Lannett increased its price for Digoxin by more than 1,000 percent was because the company could get away with it – and the American public is being victimized as a result.

Our challenge, however, goes beyond responding to heartbreaking examples of individual hardship.  We all have a stake in the rising cost of healthcare – and prescription drugs are a major part of those costs.

We all contribute to Medicare and, through our tax dollars, to the Medicaid, Tricare, and Veterans health care programs.  Moreover, the premiums that we pay for private health insurance plans will reflect – sooner rather than later – excessive price increases by drug manufacturers operating in quasi-monopolistic environments.

“If generic drug prices continue to rise, then we are going to have people all over this country who are sick and need medicine and who simply will not be able to buy the medicine they need,” Senator Sanders has observed.

I must agree.  That is why I have been working with Senator Sanders and others to investigate the source of these extraordinary price spikes in generic drugs and craft a legislative solution.

For example, although federal law requires manufacturers of “brand name” prescription drugs to pay rebates to Medicaid when they increase the price of their drugs more quickly than inflation, generic drugs like Digoxin are exempt from this requirement.

Proposed legislation that Senator Sanders and I have proposed – The Medicaid Generic Drug Price Fairness Act – would remove this exemption insofar as the Medicaid system is concerned.

We believe that closing this loophole is an important first step in limiting the impact of huge price increases in generic drugs on taxpayers.

Congress should also enact the Medicare Prescription Drug Price Negotiation Act that would permit  and direct the Secretary of Health and Human services to negotiate the prices that Medicare and Medicare Advantage plans pay for all prescription drugs – just as our government currently does for our Veterans Administration Health Plan.

I accept that companies that manufacture prescription drugs deserve to receive a reasonable return on their investments.  Yet, when the public’s health is endangered, we reach a point where free enterprise can turn into unwarranted profiteering.

It is time that the American people are allowed a stronger voice in the cost of their healthcare.  When the free market fails to restrain excessive price spikes without any apparent justification, congressional and regulatory oversight is justified.

Congressman Elijah Cummings represents Maryland’s 7th Congressional District in the United States House of Representatives.