Physicians Ask Senate Finance to Address Kickbacks, Other Factors Driving Up Drug Costs


Citing unaffordable costs of common, essential drugs such as insulin, the Association of American Physicians and Surgeons (AAPS) provided testimony for the Jan 29 Senate Finance Committee hearing on high drug prices.

The answer is not a government-run pharmaceutical industry, but rather unleashing the “competitive market forces that provide abundant options and push prices down in almost every other sector of the American economy.”

Specific solutions recommended by AAPS include:

  • End the safe harbor to the Medicare Anti-Kickback Statute. A safe harbor created for Group Purchasing Organizations (GPOs), which was supposed to lower prices, was extended to Pharmacy Benefit Managers (PBMs). Diabetes patients are one group particularly hard hit by the collusion between these middlemen and manufacturers. For example, lower cost generic insulin drugs are excluded from plan formularies, when brand name manufacturers agree to pay larger “rebates” to PBMs.   
  • Address anti-competitive manufacturer tactics that delay introduction of generics. The FDA under the leadership of Scott Gottlieb, M.D., has made welcome progress in increasing the number of lower cost generic drugs available to American patients. In 2018, the agency approved 971 generics, more than in any other year. AAPS urges reintroduction of the “Creating and Restoring Equal Access to Equivalent Samples Act of 2018” (CREATES Act, which aims to promote drug price competition by making it easier for medicines whose patents have expired to be sold as less expensive generic versions.)
  • Cut the red tape impeding innovative care models. Independent physicians are providing tremendous savings to patients with in-office dispensing of prescriptions that cut out the cost increases caused by middlemen like PBMs.  For example, a 72-year-old female patient with multiple chronic conditions purchases all nine of her medications through a Direct Primary Care office for $14.63/month. Through her Medicare “coverage” her cost would be $294.25 per month. Reintroduction and passage of the Direct Primary Care Enhancement Act would increase patient access to this promising delivery model by simply clarifying that Health Savings Accounts can be used for these arrangements.

AAPS thanks the Committee for considering this subject despite intense pressure to preserve the status quo from special interests that benefit from high prices.

The Association of American Physicians and Surgeons (AAPS) is a national organization representing physicians in all specialties, founded in 1943. Its motto is “omnia pro aegroto,” or “all for the patient.”