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Statement for the Record: Investing in the U.S Health System by Lowering Drug Prices, Reducing Out-Of-Pocket Costs, and Improving Medicare Benefits

House Committee on Ways and Means

October 17, 2019

ASHP (American Society of Health-System Pharmacists) respectfully submits the following statement for the record to the Ways and Means Committee hearing on “Investing in the U.S Health System by Lowering Drug Prices, Reducing Out-Of-Pocket Costs, and Improving Medicare Benefits.”

ASHP represents pharmacists who serve as patient care providers in acute and ambulatory settings. The organization’s nearly 50,000 members include pharmacists, student pharmacists, and pharmacy technicians. For more than 75 years, ASHP has been at the forefront of efforts to improve medication use and enhance patient safety.

We applaud the Committee's efforts to address drug pricing. ASHP’s vision is that medication use will be optimal, safe, and effective for all people all of the time. A primary tenet of that vision includes access to affordable medications needed to save or sustain lives. Addressing the issue of skyrocketing drug prices, including excessive price increases on commonly used generic medications, is one of ASHP’s highest and longstanding public policy priorities.

Poor access to medications can lead to increased morbidity and mortality, and can cause healthcare costs to increase. According to a recent Kaiser Health Tracking Poll, 29% of adults report that they are not taking their medications as prescribed due to increased cost with 8% of those individuals reporting that their condition has worsened as a result of poor medication adherence. ASHP has been proactively addressing challenges related to the rapid increase of prescription drug prices on several fronts, including working with like-minded stakeholders and educating members of Congress about the unsustainable burdens faced by patients, healthcare providers, and the entire healthcare system.

ASHP is committed to continuing to advance policy and other solutions that will lower the costs of prescription drugs, promote open competition in the marketplace, and provide patients with the proper access to care. We look forward to bipartisan solutions to the drug pricing epidemic and are pleased that Congress has taken steps over the past few months to address the issue of rising drug costs in the country. We appreciate the opportunity to work with you and your colleagues on this issue. 

ASHP supports the following provisions in the bill:

Title II: Medicare Part B and D Drug Prescription Drug Inflation Rebates

ASHP is generally supportive of any effort to control the growth of prescription drug prices over time. We feel that the section concerning drug inflation rebates for Medicare Parts B and D is a step in the right direction to achieve that goal. While we do have some questions regarding the method by which the rebates will be calculated given they seem to be imposed retroactively, we are in favor of applying rebates to drugs whose prices rise faster than the rate of inflation. In particular, we were pleased to see that certain drugs would be exempt from this formula, including drugs in shortage. ASHP has been a long-time proponent of drug shortage reform, and while we were disappointed with the exclusion of more extensive drug shortage language in this proposal, we are glad that it is recognized in this instance. Drug shortages contribute to price increases and pose a significant threat to patient care in hospitals and other settings. This can result in delayed treatment and increased risk to adverse reactions and medication errors. Shortages force healthcare providers to spend time and resources locating medications instead of focusing on direct patient care. Among the proposals we would welcome include legislation that will:

  • Require manufacturers to provide the Food and Drug Administration (FDA) with more information on drug shortages and their expected durations and allow public reporting of this information
  • Require drug manufacturers to disclose manufacturing sites, including use of contract manufacturers, and sources of active pharmaceutical ingredients (APIs) to FDA
  • Require manufacturers to establish contingency plans to maintain supply of a drug in the event of a manufacturing disruption

Also of concern is the language which purports to allocate the rebate savings to the Federal Supplementary Medical Insurance Trust Fund. Without fully understanding exactly how the allocation of resources to the fund will be utilized, we feel as if there might be a better opportunity for beneficiaries to more directly realize the benefit of these savings. 

Title III Part D Improvements and Maximum Out-of-pocket caps for Medicare beneficiaries

ASHP is in favor of any proposal which will lower the costs of drugs for patients and believes that the approach used in this section will be extremely helpful in that regard. Setting out of pocket limits for seniors will greatly reduce the burden they face with rising drug costs and is a step in the right direction towards curbing the costs of high priced drugs or those drugs with little or no competition. 


In summary, while we appreciate the Committee’s focus in addressing the very important issue of rising drug costs for patients and consumers, we would have liked to have seen the following issues addressed in this legislation:

Increase generic competition

Drug manufacturers have abused the patent system and safety requirements to prevent competitors from entering the generic marketplace. Manufacturers should be barred from using tactics like “pay for delay” and be required to justify price increases. We support legislation which has received bipartisan support in both the House and Senate such as the FAIR Drug Pricing Act of 2019 (H.R. 2296, S.1391), which requires drug manufacturers to report publicly and provide justification for price increases; The Creating and Restoring Equal Access to Equivalent Samples (CREATES) Act of 2019 (H.R. 965, S. 340), which prohibits manufacturers from using safety requirements to prevent generic competitors from accessing samples of brand named products; the Protecting Consumer Access to Generic Drugs Act of 2019 (H.R. 1499), which prohibits paying generic competitors from entering the marketplace; and the REMEDY Act of 2019 (H.R. 3812, S.1209), which prohibits the unfair extension of patents to maintain market exclusivity and eliminates the practice of evergreening.  

Prevent PBMs from imposing retroactive DIR fees  

ASHP feels as if Direct and Indirect Remuneration Fees (DIR Fees) reform should have been addressed in this legislation. DIR fees which are negotiated by PBMs, make it difficult to determine the actual cost of a drug. DIR fees are a growing nationwide concern among pharmacies that dispense medications in a community pharmacy or outpatient clinic setting.

Often DIR fees are unknown until the drug is dispensed and the claim adjudicated. Moreover, the fees themselves, which are often arbitrary in nature, have mushroomed over the past decade, to the point that pharmacies regularly see annual DIR totals in the tens of thousands to hundreds of thousands of dollars. Due to the fee structure, DIR fees assessed on pharmacies providing specialty medications have been especially problematic. Fees range from a flat rate of per dollar per claim or a percentage (typically 3‒9%) of the total reimbursement per claim. Additionally, these fees are assessed retroactively, sometimes months after the claim has been adjudicated, providing no recourse for the pharmacy impacted by the assessment.

The result of imposing DIR fees has led to higher cost-sharing responsibilities for Medicare beneficiaries. This has, in turn, caused more of these beneficiaries to enter the Part D donut hole where the patient is solely responsible for the cost of the drug. Along with the higher costs absorbed by patients, adherence rates tend to be lower among Medicare beneficiaries who are in the donut hole and may not have the financial resources to pay for their medications. This stands in stark contrast to passing on savings to patients —the very reason DIR fees targeting manufacturer rebates were created.

We ask that you consider incorporating DIR reform language in your proposal. In the interim, we ask that you consider supporting legislation such as the bipartisan Phair Relief Act of 2019 (S. 2247), which would put a 5 year freeze on DIR clawbacks and will establish enhanced oversight of these fees. 

Reject CMS’ Proposal to reduce reimbursement for 340B hospitals

The 340B Drug Pricing program is essential to many hospitals ability to provide healthcare services, including access to medications for uninsured and underinsured patients. Undermining this program will jeopardize patient care without resulting in significant cost savings. It is vital that any drug pricing proposals include provisions which would ensure the viability of 340 B hospitals to ensure that patient care is not adversely affected. 


ASHP thanks the Ways and Means Committee for holding this important hearing. ASHP remains committed to working with Congress and industry stakeholders to ensure that patients have affordable access to lifesaving and life-sustaining medications.