Senate Finance Committee To Investigate Prescription Drug Prices Pharmaceutical Companies Charge Medicaid

The Senate Finance Committee on Thursday will begin an investigation into the prices pharmaceutical companies charge Medicaid for their products, the Los Angeles Times reports. In a letter that will be sent Thursday to 19 of the nation's 20 largest drug companies, Senate Finance Committee Chair Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.), the committee's ranking Democrat, ask for "substantial documentation" on the companies' Medicaid drug pricing policies by May 7, the Times reports. Under federal law, drug companies are required to sell their drugs to Medicaid at no more than the "best price" charged hospitals, pharmacies and other buyers. Drug companies must pay rebates to states for any amount over the best price that they paid for the treatments. Under the "nominal price exception," pharmaceutical companies can sell certain treatments at reduced prices to certain charitable organizations, and the reduced price of the treatments will not factor into the best price average for Medicaid. According to the Times, the committee will investigate if drug companies are selling "far more than a nominal amount" of their treatments "at these artificially low prices" to charities or hospitals to garner more market share in outpatient sales. "These practices could undermine the purposes of (federal law) and may be costing taxpayers hundreds of millions of dollars through reduced ... rebates," the letter states. The committee specifically will examine the prices Medicaid pays for treatments in eight best-selling classes of prescription drugs, including antidepressants, anti-inflammatories, cholesterol treatments and ulcer medications. In a statement Wednesday, Grassley said, "The question is, are drug companies abiding by both the letter and spirit of the law with regard to this (nominal pricing) exception?" Christopher Loder, a spokesperson for Merck, said that the company has yet to receive the letter but its Medicaid "pricing practices are consistent with all laws and regulations" (Kemper, Los Angeles Times, 4/29).