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A small step toward understanding drug pricing

Mylan chief executive Heather Bresch testified before the House Oversight and Government Reform Committee on Wednesday. MICHAEL REYNOLDS/EPA

If nothing else, last week’s Congressional shaming of the drug company executive behind the $600 EpiPen episode made for decent theater. Mylan boss Heather Bresch withstood round after round of scolding by members of the House Committee on Oversight and Government Reform — including Representative Stephen Lynch of Massachusetts– over the company’s price-gouging. But unlike true drama, the ending was never in doubt. Maryland Representative Elijah Cummings acknowledged the futility of the fuming, saying, “After Mylan takes our punches, they’ll fly back to their mansion in their private jets and laugh all the way to the bank while our constituents suffer, file for bankruptcy, and watch their children get sicker or die.” Over the top, yes, but closer to reality than the prospect of politicians goading drug makers into voluntarily undertaking pricing reform.

One of the most unsatisfying aspects of the Mylan hearing — and a February verbal takedown of Turing Pharmaceuticals’ Martin Shkreli by the same committee — is that they were postmortems, not preemptive strikes. By the time fingers started pointing at the unrepentant CEOs, their companies already had made many millions of dollars from selling grossly overpriced products.


A bipartisan bill just filed on Capitol Hill won’t stop such profiteering. It might, however, do away with some of the mystery surrounding pricing, and allow consumers and elected officials to weigh in before a hike takes effect. The proposal calls for requiring companies to provide the Department of Health and Human Services with a report explaining any price increase of 10 percent or more in an “understandable online format” – 30 days in advance of its implementation. In addition to R&D expenses, the bill, known as the Fair Accountability and Innovative Research (FAIR) Drug Pricing Act, also requires the disclosure of advertising, marketing, and manufacturing costs, as well as information about expected profits. It’s based on the idea that “transparency leads to accountability,” according to Arizona Republican John McCain, the Senate co-sponsor of the legislation.

That’s a bit of a stretch — the law wouldn’t limit prices, and drug makers could elude the spotlight of added scrutiny by holding annual increases to a shade under 10 percent — but the proposed law is a pragmatic move in the right direction. Years of talk about more ambitious ways to address soaring prescription drug costs hasn’t yielded tangible results. And with the exception of Vermont, legislation similar to the FAIR bill has yet to pass in about a dozen states where it’s been introduced, including Massachusetts. The lack of progress is a testament to the power of the drug industry lobby, which was quick to condemn the new federal proposal as a step toward government price setting.


Drug spending in the United States reached a record $425 billion last year, and it’s projected to top $600 billion by the end of this decade. Asking pharmaceutical companies for a better accounting of where those dollars are going seems like a reasonable request.