Consistent with popular predictions and our prior posts, Congress made drug pricing a key item on its investigative agenda in the first year of the 116th Congress. Several factors contributed to the uptick in congressional drug pricing oversight activity, including the elevation of new Democratic chairs in the House with longstanding interests in drug pricing issues, and continued bipartisan interest in examining aspects of the pharmaceutical industry that affect price, such as the supply chain, patent protection, and generic entry. In 2019, more than ten committees took various forms of investigative action on drug pricing, including by issuing document request letters and holding more than twenty hearings. Although the general topic of drug pricing has long been of interest to Congress, the magnitude and focus was somewhat different in 2019.
Over the past year, we have seen an increased effort by Congress to investigate specific substantive issues in the U.S. pharmaceutical market that may affect the pricing of drugs. For example, some committees held hearings or conducted inquiries on issues such as the supply chain, market competition, patents and generics, and patient out-of-pocket costs. Committees have also looked at therapeutic classes of drugs, such as insulin, as a means of examining various market forces such as generic competition and antitrust considerations. We have also observed some Members seeking to tie oversight activities to legislative efforts by using oversight to highlight and build public support for particular pieces of legislation, such as the CREATES Act, HR 3, and the Grassley-Wyden plan.
As we enter 2020, it now seems clear that the last five or so years of drug pricing investigations have progressed over an arc with three phases. First, in the early days of modern drug pricing investigations Congress focused on perceived outliers. This was the era that began around 2015 and included the infamous case of Martin Shkreli and Turing, which increased the price of the anti-parasitic drug Daraprim by more than 5000%. Soon, however, Congress had fewer perceived outliers to highlight. And when it tried to investigate some that it perceived as outliers, it often ran right into the complexities of the system. Mylan, for example, countered criticism of its EpiPen price by noting that the company’s actual net price had not been increasing even as the list price increased. The costs in the system, it seemed, were going elsewhere. Third, then, Congress became more intrigued about these systemic factors affecting drug prices and turned its attention there. These more narrow investigations of systemic issues have been the key hallmark of drug pricing investigations in 2019.
The level of congressional oversight and investigative activity on drug pricing is likely to continue this year, and it could very well intensify as we move closer to the national elections. For example, the Democratic National Committee recently launched an advertising campaign that criticizes the President and Republicans in Congress for not achieving drug pricing reforms. Some of the broad investigations of industry practices that began last year are continuing this year as well, and we expect any new investigations to continue the trend of looking at systemic issues. We also expect that drug pricing investigations will continue across many different committees, companies, and classes of drugs for the rest of 2020.
In the meantime, pharmaceutical companies can continue to evaluate critically the issues that may bring congressional scrutiny. Companies can prepare now by developing response plans under guidance from counsel experienced in handling congressional investigations.