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Courtney Remarks on How the Lower Drug Costs Now Act Will Lower Prices for Employers, Patients, and Medicare

May 6, 2021
Press Release

NORWICH, CT—Yesterday, Congressman Joe Courtney (CT-02) spoke with Dr. Mariana Socal, (Associate Scientist, Johns Hopkins Bloomberg School of Public Health) about the need to lower prescription drug costs, and how the Lower Drug Costs Now Act would create a healthier, less restrictive, and more affordable health care marketplace for all Americans. In a hearing held by the House Education and Labor Subcommittee on Health, Employment, Labor and Pensions (HELP), Courtney noted that the Connecticut Insurance Department has reported that the share of premiums that goes towards prescription drugs has risen sharply in recent years. Courtney and Dr. Socal also discussed how the inordinately high prices Americans pay for prescription drugs—which are sold overseas at much lower costs—is a leading driver of the skyrocketing cost of health care.

Courtney is a senior member of the House Education and Labor Committee, and has pressed for years to give Americans a fairer deal on prescription drug costs by allowing Medicare to negotiate with pharmaceutical companies for lower, market-rate prices. In 2019, he helped pass the Lower Drug Costs Now Act when it was introduced as H.R. 3 in the previous 115th Congress. The bill would provide access to lower prescription drug costs to all Americans—those who receive health care through Medicare, and who receive coverage through employer-sponsored plans. The Lower Drug Costs Now Act will be reintroduced to the 116th Congress in the weeks ahead.

During yesterday’s hearing, Courtney noted that in Connecticut, the share of premiums that pay for prescription drugs has risen by 8% in just the past few years—from 15% to 23%. Dr. Socal agreed that this trend is driving the sharp premium increases in employer-sponsored health care plans.

Courtney: “[…] Last year, the insurance commissioner reported that the share of premiums pay for prescription drugs is now at about 23% of the premium dollar. If you go back really even just a few years ago, that was at 15%. Do you see that trend in employer- sponsored plans, in terms of how much prescription drugs are driving the increase in premium?”

Dr. Socal: “Yes, we see that a lot. And not only increases in premiums, but really increases in the overall spending that patients make, in their overall out-of-pocket costs as well.”

Courtney and Dr. Socal also discussed how the Lower Drug Costs Now Act would help lower prescription drug costs for all Americans—not only those who receive coverage through Medicare, but also for those who receive coverage through employer-sponsored plans.

Courtney: “[…] There are obviously a lot of other health care costs that go into the premium

dollar—whether it’s hospital reimbursement, physician reimbursement—so again, it’s really disproportionate in terms of the trajectory that we’re seeing right now. Which really is why I think this bill—which sometimes when you talk about prescript drug costs it’s all sort of about Medicare—but this bill’s not just about Medicare it’s also about providing relief for employer sponsored plans.”

Dr. Socal: “Absolutely. And a lot of what’s driving these costs are these very expensive drugs that

really don’t offer any additional value as compared to alternatives that are in the market. But they’re just increasing their prices, and that’s really unbeknownst to patients and often to physicians as well.”

Rep. Courtney noted that the Lower Drug Costs Now Act does not impose an obligation on employers to purchase health care plans that include new, lower, government-negotiated prices—it only presents them with the choice. That choice, Dr. Socal argued, is essential in creating a more transparent and healthier health care marketplace.

Courtney: “As someone who was also a small employer at one time, I want to just go back to this point about what the employer’s fiduciary responsibilities and options are. Again, this bill does not mandate that an employer purchase a health care plan that has the government-negotiated price, right? I mean, they still have an option to use market, or PPMs, or whatever, to get their prescription drug coverage, is that right?

Dr. Socal: “They do have an option, and that option would bring really important transparency to

this market. Because even if a self-insured employer is hiring a PPM to negotiate on their behalf, oftentimes an employer does not even know exactly how much they’re paying for drugs. There’s an important lack of transparency there and this bill would bring a lot of transparency back for employers to know what’s best for them.

Courtney: “And transparency is really what’s essential for market economics, is that correct?”

Dr. Socal: “It is crucial.”

Courtney: “That’s the irony of some of the rhetoric here. Is that actually, this bill provides a healthier marketplace, not a more   restricted marketplace. Isn’t that correct?”

Dr. Socal: “It is, and part of the lack of transparency is having so many intermediaries in our negotiations, and having a transparent benchmark will employers to be able to even monitor the work of these intermediaries more effectively.”

To watch the full conversation, click here.