Washington D.C. — House Energy and Commerce Oversight and Investigations Subcommittee Chair Morgan Griffith (R-VA) delivered the following opening remarks at today’s hearing titled: “At What Cost: Oversight of how the IRA's Price Setting Scheme Means Fewer Cures for Patients.”

PROGRESSIVE ATTACK ON DRUG INNOVATION

“Today we take stock of where things stand with the drug provisions implemented in the Inflation Reduction Act.

“I want to say at the outset that Congress needs to work to address high drug prices. Thankfully this Committee historically has a track record of working in a bipartisan fashion to address this issue.

“But most of the medical drug pricing provisions signed into law by the Inflation Reduction Act raise serious concerns.

“That legislation was ostensibly to allow negotiations for the price of Medicare drugs through the Centers for Medicare and Medicaid Services Drug Price ‘Negotiation’ Program.

“This would allow government bureaucrats to so-call ‘Negotiate’ Medicare drug prices. However, the scheme as written is unconstitutional.

“Recently, President Biden named the first ten prescription drugs that will be subject to this so-called ‘negotiation.’ 

NO REAL “NEGOTIATIONS”

“I call it a so-called ‘negotiation’ because it is not true negotiation.

“It is a Godfather mafia-style negotiation where bureaucrats at CMS make companies an offer they ‘can not refuse.’

“A drug manufacturer has two options:

“One: voluntarily negotiate and face an excise tax of up to 95 percent of gross sales for that drug, if they do not comply with the government’s demands.

“Two: if the drug manufacturer doesn’t wish to voluntarily ‘negotiate,’ they are forced to withdraw all their drugs from Medicare, and also Medicaid.

“Reiterating, a drug company is forced to either accept the drug price the government gives them ‘out of the goodness of the government’s heart’ or the government will take up to 95% of gross sales from that drug.

“Or, if they refuse to ‘negotiate,’ the manufacturer loses access to Medicare and Medicaid.

“The federal government, through Medicare, Medicaid, and CHIP, controls almost 40% of the legal drug sales in the United States.

“Last week, Health and Human Services responded to legal action claiming that participation in Medicare Drug Price ‘negotiation’ is voluntary and that the Program does not compel participation.

“But you must participate or lose access to almost 40% of the US market on all of your medications.

“And, if you participate, you have virtually no bargaining power.

“The federal government can take from a private company more money on a medicine than that private company receives, or makes, from that medicine. Unless the private company agrees to the offer, they ‘can not afford to refuse.’

“The private pharmaceutical company is just like the movie producer, Jack Woltz, in the film The Godfather.

“Take the government offer or else."

UNCONSTITUTIONAL PRICE SETTING

“This law clearly violates the takings clause of the Fifth Amendment.

“I raised this concern in 2019 when the bill was first presented.

“No matter how much elaborate wordplay big government apologist lawyers want to use in calling the plan a form of ‘negotiation’ does not make it true. The fancy words do not change the fact their scheme is a taking.

“To paraphrase an old saying: ‘calling a skunk by any other name does not make it smell any better.’

“When a competing Republican measure with similar language was briefly brought forward, I voted against that one too on constitutional grounds.

“Moreover, the non-partisan Congressional Research Service warned that the price setting regime in the Inflation Reduction Act was on constitutionally weak legs.

“There are now nine legal cases challenging this drug price ‘negotiation’ program.

“I am confident that one or more of these lawsuits will be successful and this program will be found to be unconstitutional."

DESTROYING INNOVATION

“This hearing will help us in Congress to understand the aspects of the price control scheme that are most harmful to patients and innovation so that we can craft Constitutional bipartisan legislation that brings relief on drug prices without crushing drug research and development.

“One study says, 24-49 therapies currently on the market would not be available today if the Inflation Reduction Act was in place during their development.

“These therapies could range anywhere from cancer, rare diseases, or MS drugs.

“As our witnesses can testify to today, small molecule drugs and biologic drugs used to treat rare diseases are among those treatments most impacted by the Inflation Reduction Act.

“Patients rely on the incredible innovation we have had in the US and the provisions we are talking about today will make the US second rate in the world, when it comes to the realm of new drug development.

“We know the American people want lower prices on the most expensive prescription drugs, but we shouldn’t sacrifice access to life changing treatments in the process.

“That’s why it’s so important for Congress to fix the worst impacts of the drug price ‘negotiation’ program and in a manner that is consistent with the United States Constitution.”