Senate Minority Report Says ‘Tangled Web’ to Blame for Higher Drug Costs

The “tangled web” of drug supply and payment chains benefits all the players except consumers, according to a Senate Finance Committee minority report.

The report claims U.S. consumers are forced to endure higher drug costs and will “continue to struggle as the system’s convoluted incentives drive up prices that benefit businesses up and down the supply and payment chain.”

The system encourages manufacturers to set high launch prices for maximum profit and they can subsequently raise the price throughout the drug’s time on the market, using patent protections, exclusivity rights and other methods to discourage or impede generic or biosimilar competitors. After a drug has cornered an exclusive area of the market, the manufacturer can put pressure on insurers, PBMs, pharmacies and wholesale distributors.