Faced with price controls, the pharmaceutical industry is mounting the pressure on Congress

Steve Ubl, head of the ubiquitous Pharmaceutical Research and Manufacturers of America, or PhRMA, called the bill’s passage by the Senate on Aug. 7 a “tragic loss for patients.” He threatened in an interview with Politico that politicians would suffer if they voted for the measure, adding that “few associations have all the tools of modern political advocacy in the manner of PhRMA.”
Over the past 12 months, PhRMA and closely allied groups have spent at least $57 million — including $19 million since July — on TV, cable, radio and social media ads to oppose price negotiations. , according to the monitoring of advocacy group Patients for Affordable Drugs. PhRMA has spent more than $100 million this year to unleash a massive team of 1,500 lobbyists on Capitol Hill.

The final bill is weaker than previous versions, which would have extended negotiations to more drugs and included private insurance plans. The bill would allow Medicare to negotiate prices starting in 2026, initially for just 10 drugs.

That would save the Centers for Medicare & Medicaid Services about $102 billion over a decade, according to estimates from the Congressional Budget Office. In 2021 alone, major US pharmaceutical companies recorded tens of billions of dollars in revenue: Johnson & Johnson ($94 billion), Pfizer ($81 billion), AbbVie ($56 billion), Merck & Co. ($49 billion) and Bristol Myers. Squibb ($46 billion).
The bill authorizes hundreds of millions of dollars for CMS to create a drug negotiation program, setting in motion a system of cost-benefit assessments like those used in Europe to guide price negotiations with industry. Americans pay, on average, four times what many Europeans do – and sometimes much, much more – for the same drugs.
The bill does not affect the list prices companies charge for new drugs, which have risen from a median price of $2,115 in 2008 to $180,007 in 2021, according to recent research.

Proponents of the bill say the PhRMA’s dark prophecies are overblown and that history is on their side.

“It’s complete bulls**t and a scare tactic,” Andy Slavitt told KHN. As a top federal health official in 2016, he tried to change part of a Medicare program that pays doctors a flat 6% of the cost of a drug each time they administer it, creating an incentive to use the most expensive infusion drugs. PhRMA funded most of the vocal campaign that defeated his efforts, Slavitt said.

Another scare tactic: the pharmaceutical industry warns that any price negotiation will kill innovation. Such warnings “have been the pharmaceutical response in literally every instance since 1906,” the year the first drug regulatory agency was established, said Dr. Aaron Kesselheim, who leads the program on regulation, therapeutics and law at Brigham and Women’s Hospital in Boston. And yet, he said, regulatory changes rarely stifle investment in new drugs.

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For example, the pharmaceutical industry lamented a bill to boost generic drugs sponsored by Rep. Henry Waxman (D-California) in 1984. Yet while 50 percent of prescribed drugs were generics in 2000 — up from 15 % in 1980 – Approvals of important new drugs also skyrocketed during the period, Kesselheim noted. The threat of losing market share to generics, he said, may have prompted manufacturers to invest in innovation.

In 1993, Thomas Copmann, then vice president of the PhRMA, claimed that President Bill Clinton’s Vaccines for Children program, which funded vaccinations for any child whose parents could not afford them, “would only kill the innovation because the government would control the market”. Over the next 16 years, childhood immunization rates soared from 72% to around 93% for the polio vaccine, for example. During the same period, new vaccines against hepatitis A and B, pneumonia, varicella, human papillomavirus and rotavirus were added to the schedule.

Pharmaceutical industry attacks on regulation have a rich and thriving history. In the early 1900s, the Proprietary Association of America warned newspapers that their advertising revenue would dry up if the industry had to list its ingredients (primarily alcohol). The law was passed in 1906, but newspapers – and the pharmaceutical industry – survived it.

Sometimes industry punches are a bargaining tactic, which has led to concessions from Congress and the federal government.

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In the 1990s, when discussions began about requiring pharmaceutical companies to pay user fees to have their drugs reviewed, the industry described the fees as an “innovation tax”. Eventually, he agreed to pay the fees if the FDA set deadlines for the reviews. The resulting increase in FDA staffing led to an increase in drug approvals over the next five years.
Still, “killing innovation” remains an inescapable trope. Drug imports, efforts to curb ‘pay-for-late’ deals between brand and generic companies, price-gouging investigations by drugmakers — all of it, say conservatives and pharma executives , “kills innovation”. Former House Speaker Newt Gingrich in 2009 said the same thing about the Affordable Care Act. A golden decade for new drugs followed, with FDA approvals rising from 21 in 2010 to 50 in 2021.
Critics of the current bill argue that history and economic research show that investment in drugs will lag when markets contract, which they say will be the case if price controls drive companies to make less money on their blockbuster drugs.

If Medicare negotiations cut profits from the biggest earners, investors in risky biotech companies, whose drugs rarely make fortunes, will shift some of their portfolios from pharmaceuticals to other sectors, said Craig Garthwaite, director of health care at Northwestern University’s Kellogg School of Management. “There’s a fair argument as to how much,” he said.

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He noted that after the creation of Medicare’s drug program in 2003 – initially opposed by the pharmaceutical industry – an increase in federal drug spending prompted drug companies to spend more on drugs for seniors. . “Once you invest in clinical trials, that money never comes back unless it’s revenue for products sold,” he said.

The moribund antibiotic industry shows how shrinking markets — hospitals and doctors intentionally limiting the use of new drugs to reduce microbial resistance — lead to lower investment, Garthwaite said.

Yet some experts say Medicare drug price negotiations could accelerate innovation if they drive companies away from drugs that modestly improve outcomes but can fetch huge sums of money under the current pricing system. not controlled.

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In cancer, most investments are in drugs that offer additional benefits at a premium price, said Dr. Vincent Rajkumar, an oncologist at the Mayo Clinic. He was a principal investigator in two large trials testing Ninlaro (ixazomib), a pill for multiple myeloma that is very similar to the injected drug Velcade (bortezomib). Although more convenient, Ninlaro is no more effective, he said, and it costs about eight times as much as generic bortezomib. A new multiple myeloma drug, Xpovio (selinexor), keeps patients progression-free for about four more months; it costs $22,000 a month.
Most new cancer drugs only prolong life for a short time, said Rajkumar, who helped organize a 2015 letter signed by 118 oncologists calling for Medicare to be given bargaining power. If they were forced to negotiate, “maybe the companies would spend their research and development funds on something more meaningful,” he said.

In other high-income countries, drug price negotiations are the norm. “Right now we’re the odd man out,” Rajkumar said. “Are we really so smart that we’re right and everyone else is wrong? Do we really take care of our audience better than everyone else?

Large patient groups such as the American Cancer Society, the American Heart Association and the American Diabetes Association, all of which have strong support from the pharmaceutical industry, remained on the sidelines of the debate over the draft’s wording. drug price negotiation law.

Some other patient groups, fearing the industry will lose interest in drugs for smaller populations if prices drop, opposed the bill — and succeeded in winning exceptions that would prevent Medicare from negotiating drug prices. drugs for rare diseases.

David Mitchell, a multiple myeloma patient who founded Patients for Affordable Drugs in 2017, said he was sure the bill would not discourage innovation – and his life may depend on it. The 68-year-old said he was on a four-drug regimen, but “the cancer is very smart and finds a way around the drugs”.

“The idea that taking a small bite out of pharma revenue is going to stop them from creating new drugs is bullshit,” he said.

KHN (Kaiser Health News) is a national newsroom that produces in-depth journalism on health issues. Along with policy analysis and polls, KHN is one of the three main operating programs of the KFF (Kaiser Family Foundation). KFF is an endowed non-profit organization providing information on health issues to the nation.


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