Rep. Elijah E. Cummings (D-MD 7th District), the Chairman of the Committee on Oversight and Reform, launched an investigation into the prescription drug industry’s pricing practices.

Cummings sent letters to 12 drug companies seeking detailed information and documents about the companies’ pricing practices. The letters seek information and communications on price increases, investments in research and development, and corporate strategies to preserve market share and pricing power. The letters are the first step in the Committee’s review of pricing practices. The Committee will hold its first of several hearings in the coming weeks to hear from experts, as well as patients affected by rising drug prices.

The Centers for Medicare and Medicaid Services projects that spending on prescription drugs will increase more rapidly than spending on any other health care sector over the next ten years. The federal government bears much of the financial burden of escalating drug prices through Medicare Part D, which provides drug coverage to approximately 43 million people. The government is projected to spend $99 billion on Medicare Part D in 2019. In 2016, the 20 most expensive drugs to Medicare Part D accounted for roughly $37.7 billion in spending.

A review by the Inspector General of the Department of Health and Human Services found that ten of the most expensive brand-name drugs accounted for $15.6 billion of spending in the catastrophic coverage phase of the Medicare Part D benefit in 2015. The Inspector General has also found that Part D payments for brand-name drugs increased by 62% from 2011 to 2015, after taking into account manufacturer rebates, even though the number of prescriptions fell by 17%.

According to an analysis conducted by AARP, approximately 94% of widely-used brand-name drugs on the market between 2005 and 2017 more than doubled in price during that time, and the average price increase in 2017 was 8.4%.

Cummings is focusing on drugs that are among the costliest to Medicare Part D, among the costliest per beneficiary, or had the largest price increases over a five-year period.

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