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McCaskill Seeks to Prevent Price Gouging Prior To Health Care Changes

Press Release

Location: Washington, DC

In recent years, various industries have taken advantage of consumers by increasing prices and implementing new predatory practices right before new consumer protection laws go into affect. Today, U.S. Senator Claire McCaskill introduced an amendment to the Patient Protection and Affordable Care Act that would strengthen provisions to ensure health insurance companies, pharmaceutical companies and medical device manufacturers cannot run up prices between the passage of the health reform bill and its implementation.

"We saw this with the credit card reform bill -- the big corporate interests beat us to the punch by raising their interest rates on consumers before regulations preventing such actions went into place. We're on to these schemes. This provision is dotting the "I's and crossing the "T's in order to close loopholes that could otherwise lead to price gouging," McCaskill said.

Consumers may already be experiencing price gouging from health related industries according to analysis that has been reported in major media sources. It has been alleged that insurance companies and manufacturers are running up prices now in anticipation of consumer protections included in health insurance reform. In fact, between 2008 and 2009, brand name drug prices have gone up by 9 percent despite the U.S. economy being in a state of deflation. Experts also predict that premiums for small businesses will double in 2010 from the 2009 rate.

The rise in prices mirrors a similar trend from 2006 when brand name drugs increased by 3.9 percent -- four times the general inflation rate -- during the first three months of the year, an action believed to have been taken by pharmaceutical companies to get ahead of the Medicare Prescription Drug program regulations. It was the largest quarterly increase experienced in that 6 year period.

The Patient Protection and Affordable Care Act currently seeks to address insurance premium increases and price gouging, but the current provisions contain limitations and would benefit from being strengthened.

McCaskill's amendment would strengthen the "Ensuring That Consumers Get Value for Their Dollars" section of the Patient Protection and Affordable Care Act by:

* Making July 1, 2009 the benchmark date from which price increases can be measured, thus creating certainty as to when "unreasonable" price increases occur and including in the evaluation any run up in prices that occur during the debate of health care reform.

* Requiring uniform data collection on all health care sector participants from which price gouging can be determined in order for meaningful comparisons can be made.

* Empowering the Department of Health and Human Services (HHS) by requiring the Secretary to work with the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to define "excess price inflation" and report their findings to the appropriate states and to the American people. This provides certainty for state officials and consumers, and ensures that HHS, DOJ and FTC will produce meaningful information from which states can determine whether price increases in their respective states are "justified".

* Implementing a more comprehensive approach to protecting consumers from health sector price gouging by including pharmaceutical companies and device manufacturers under the anti-gouging provisions of the bill, as opposed to just health insurers.

* Instituting meaningful penalties for those engaged in price gouging. Additionally, the amendment provides for the return of penalty funds to consumers where administratively possible and, when that is not possible, pays down the deficit.

* Granting fairness to insurers and manufacturers by providing for a process in which they can appeal a finding of "excess price inflation".

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