UPDATE 2-U.S. Democrats demand analysis of drug price rises

Wed Nov 18, 2009 4:09pm EST

* Two senior House Democrats want GAO report 'expedited'

* GAO may monitor drug prices for Congress going forward

* Senate Democrat also seeks HHS probe (Adds Senate request, background)

By Susan Heavey

WASHINGTON, Nov 18 (Reuters) - Congressional Democrats are seeking government investigations into recent price increases of brand-name prescription drugs, as Congress finalizes an overhaul of the healthcare system.

Lawmakers are concerned the companies are trying to reap gains ahead of reforms aimed at lowering drug prices and forcing drugmakers to partly fund changes that aim to boost the number of Americans covered by health insurance.

"I want to know if there's a back-door move underway by the drugmakers to recover some of the concessions they've promised for health care reform," said Senator Bill Nelson, who represents many older Americans in the state of Florida.

Nelson on Wednesday asked the Department of Health and Human Services' inspector general to investigate the issue.

Leaders of the U.S. House of Representatives Ways and Means and Energy and Commerce Committees said in a letter to the Government Accountability Office (GAO) that they would also probably seek another analysis of price trends after the health overhaul measures are implemented.

The House letter was sent late Tuesday after the nation's top lobbying group for elderly Americans earlier this week criticized an estimated 9 percent increases in prices for some of the most-widely used medicines.

Drugmakers "may be artificially raising prices for certain pharmaceutical products in expectation of new reforms," wrote Charles Rangel and Henry Waxman, the respective chairmen of the House Ways and Means Committee and the House Energy and Commerce Committee.

"Any price gouging is unacceptable, but anticipatory price gouging is especially offensive," their letter said.

Lawmakers asked the nonpartisan GAO to compare drug price increases against the Consumer Price Index and to analyze which specific drugs accounted for the biggest price changes. The report will give Congress a "benchmark of drug manufacturer pricing activity just prior to passage" of a Democratic-written healthcare reform bill, the lawmakers said.

The House lawmakers also asked the GAO to prepare a proposal to continually monitor drug prices for Congress.

Industry analysts have largely expected Pfizer Inc (PFE.N), Merck & Co Inc (MRK.N) and other manufacturers to boost prices of top-selling medicines that are nearing the end of their patent protection, triggering cheaper generic alternatives. The so-called "patent cliff" is likely to cost top drugmakers billions of dollars in sales through 2016.

Drugmakers have largely backed Democrats' plan to overhaul the U.S. healthcare system, making a deal with some senators and the White House to provide $80 billion in savings and rebates over 10 years. Senate Democratic leaders were expected to introduce final bill language later on Wednesday.

The House has already passed its bill and takes a harder line on drugmakers through additional rebates and other changes.

Pharmaceutical Research and Manufacturers of America (PhRMA), which represents brand-name drugmakers, had no immediate comment on the probes.

RELATED NEWS: * Senate Democrats to unveil healthcare bill [ID:nN18125877] * U.S. reform a future boost for drugmakers [ID:nN11374211] * TAKE A LOOK-Senate to open health debate [ID:nN20512341] (Reporting by Susan Heavey; Editing by Lisa Von Ahn, Derek Caney and Tim Dobbyn)