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Daily News Record: Goodlatte Tackles Drug Prices

Congressional Hearings Begin Today Into ‘Pharmaceutical Price Gouging’

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Washington, November 17, 2015 | comments
By Rachel Cisto

BROADWAY — Nelson Showalter has owned the Broadway Drug Mart since 1987, when he purchased the business from his father.

Over nearly 30 years, Showalter has built up a loyal customer base, but as he explained to U.S. Rep. Bob Goodlatte, R-Roanoke, on Monday, the cost of some prescription drugs might make that base harder to maintain. Goodlatte visited the Broadway pharmacy one day before the House Judiciary Committee begins a series of hearings on competition in health care.

Goodlatte, chairman of the committee, called the hearings in response to recent incidents of “pharmaceutical price gouging.”

One such incident occurred earlier this year, when Turing Pharmaceuticals AG raised the price of Daraprim, a medication used to treat AIDS and cancer patients, from $13.50 a pill to over $700 a pill overnight.

Showalter said a drug his store purchased in September cost 400 percent more than it had in January.

Goodlatte said sudden price increases aren’t fair to smaller chains and promised to look into the manufacturing companies.

“I’d like to write to these companies and ask why it’s necessary for the price of a drug to go up 400 percent in nine months,” he said.

Showalter said, like Daraprim, the rising costs of some prescriptions are making it too expensive for his pharmacy to dispense them. He relayed a story of a patient who came in with a prescription for diabetes medication as an example.

“We entered it into the system to see the cost, which the insurance companies set,” he said. “If we filled that prescription, we’d take a $118 loss.”

In another case, Showalter said, an insurance company representative told him he would have to “tell the patient we couldn’t get that medication, or fill the prescription at a loss because we have a contract,” he said. “Our hands are tied.”

John Bell, from WilliamsonHughesPharmacy in Harrisonburg, said that while larger chains such as CVS or Walgreens purchase drugs in much larger quantities, even some of them are losing money on some prescriptions.

“They might be purchasing at a little better rate, but not to the tune of $118,” he said.

Massachusetts-based Mc-Kesson Corp. manages the HealthMart Pharmacy Network, which both Broadway Drug Mart and WilliamsonHughes are part of.

Joseph Ganley, vice president of federal government affairs for McKesson, said the HealthMart model allows for “the advantages of a chain pharmacy while retaining independent owners.”

However, Ganley said, no matter the size of the chain, the manufacturers’ fluctuations in cost end up hurting the pharmacy.

“Realistically, there’s no pushback from the insurance companies,” he said. “The companies put downward pressure on the pharmacies instead.”

In addition to rising prices from manufacturers, Showalter said some health insurance companies offer incentives to patients for using pharmacies the companies own, eliminating most competition and hurting smaller, independently owned pharmacies like his.

He cited the relationship between Humana insurance and Walmart pharmacies as an example.

“We’re not ‘locked-out’ of providing for [Humana customers], but there’s a zero dollar co-pay at Walmart and a $7 co-pay here,” he said. “We’ve had customers say, ‘I want to fill my prescriptions here, but it’s a cost thing.’”

Both Showalter and Bell urged Goodlatte to support House Bill 244, known as the MAC Transparency Act, which would prevent insurance companies from requiring patients use a specific pharmacy or providing special incentives for using a pharmacy the company owns.

“This is a very important bill for the survival of independent pharmacies,” Showalter said.

However, John Castellani, the president and CEO of Pharmaceutical Research and Manufacturers of America, wrote last month that price controls on prescription drugs would “erode the U.S. leadership in biomedical innovation, spur loss of high-tech STEM jobs and undermine U.S. competitiveness.”

Castellani’s statement also said the proposals to change regulations in the industry would “halt medical innovation” and encourage suppliers to import drugs from other countries and put patients at risk.

Goodlatte said he would take the stories he’d heard from Bell and Showalter and use them as examples in the hearings.

“Hopefully, we can shine a spotlight on this problem,” he said, “and see if we can do some good.”
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