For decades, the drug industry has gone on a bloody rampage every time Congress has considered a regulatory measure that threatens its profits. But the hyperbole has reached a new pitch in recent weeks as the Senate moved to adopt a measure to negotiate drug pricing into the Inflation Reduction Act.
Dr. Michelle McMurray-Heath, president of the Biotechnology Innovation Organization, said last month that the bill could “lead us light years into the dark ages of biomedical research.” Venture capitalists and other opponents of the bill said it would “immediately end private financing of drug discovery and development.”
Steve Uble, leader of the U.S. Pharmaceutical Research and Manufacturers of America, or PHRMA, called the Senate’s passage of the bill 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 that PhRMA does.”
In the past 12 months, PhRMA and closely allied groups have spent at least $57 million — $19 million of that since July — on TV, cable, radio and social media ads opposing price negotiations, according to the advocacy group Patients for Affordable Medicines Monitor. PhRMA spent more than $100 million this year to bring a massive team of 1,500 lobbyists to Capitol Hill.
The final bill is weaker than previous versions, which would have expanded coverage for more drugs and included private insurance plans. The bill would only enable Medicare to negotiate prices starting in 2026, initially for just 10 drugs.
That would save the Centers for Medicare and Medicaid Services about $102 billion over a decade, the Congressional Budget Office estimates. In 2021 alone, the top US pharmaceutical companies generated 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, a system of cost-benefit evaluation used in Europe to negotiate prices with industry. Americans pay an average of four times as much — and sometimes much more — than many Europeans for the same drugs.
The bill does not affect companies’ list prices for new drugs, which have risen from an average price of $2,115 in 2008 to $180,007 in 2021, according to a recent study.
The bill’s champions say PHRMA’s gloomy predictions are overwhelming, and that history is on their side.
“This is complete nonsense and a scare tactic,” Andy Slavitt told KHN. As a leading federal health official in 2016, he tried to change part of a Medicare program that pays doctors a fixed 6% of the drug’s cost each time they administer it, creating an incentive to use the most expensive infusion drugs. PHRMA funded most of the loud campaigns that defeated his efforts, Slavitt said.
Another scare tactic: the drug industry warns that any price negotiation will kill innovation. Such warnings “constitute the pharma response in literally every instance since 1906,” the year the drug regulatory agency was first created, said Dr. Aaron Kesselheim, who heads the Regulatory, Therapeutics and Legal Affairs Program at Brigham and Women’s Hospital in Boston. And yet, he said, regulatory changes rarely deter investment in new drugs.
For example, the drug industry in 1984 Rep. Bemoaned a bill sponsored by Henry Waxman (D-Calif.) to encourage generic drugs. Yet while 50% of drugs prescribed in 2000 were generic — up from 15% in 1980 — important approvals for new drugs also increased during this period, Kesselheim noted. The threat of losing market share to generics, he said, could prompt manufacturers to invest in innovation.
In 1993, Thomas Koopman, then a PhRMA vice president, complained that President Bill Clinton’s Vaccines for Children program, which funded vaccinations for any child whose parents could not afford them, “will just kill innovation because government controls the market.” will.” Over the next 16 years, childhood vaccination rates rose — for example, from 72% to about 93% for the polio vaccine. During the same period, new vaccines against hepatitis A and B, pneumonia, chickenpox, human papillomavirus and rotavirus were added to the schedule.
Drug industry attacks on regulation have a rich and florid 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 (mostly alcohol). The law was passed in 1906, but newspapers – and the drug industry – survived it.
Sometimes industry breast-beating is a negotiating tactic, which has led to concessions from Congress and the federal government.
In the 1990s, when discussions began about requiring drug companies to pay users a fee to review their drugs, the industry described the fee as a “tax on innovation.” Finally, it agrees to pay the fee if the FDA sets a deadline for the review. The resulting increase in FDA staffing levels led to an increase in drug approvals over the next five years.
Yet “killing innovation” remains a go-to trope. Efforts to rein in drug imports, “pay-for-delay” deals between brand and generic companies, investigations into price gouging by drugmakers — all, according to conservatives and pharmaceutical executives, “kill innovation.” Former House Speaker Newt Gingrich said the same about the Affordable Care Act in 2009. A golden decade for new drugs followed, with FDA approvals increasing from 21 in 2010 to 50 in 2021.
Critics of the current bill argue that history and economic research show that drug investment will lag if the market shrinks, which they say will happen if corporations make less money from their blockbuster drugs by controlling prices.
If Medicare negotiations cut profits for top earners, investors in risky biotech companies, whose drugs rarely make it rich, will shift some of their portfolios away from pharmaceuticals and into other sectors, said Craig Garthwaite, director of health care at Northwestern University’s Kellogg School. of management. “There is a fair argument as to how much,” he said.
He noted that after Medicare’s drug program was created in 2003 — initially opposed by the drug industry — increased federal spending on drugs spurred pharmaceutical companies to spend more on drugs aimed at older people. “Once you invest in clinical trials, that money never comes back unless it’s revenue for products sold,” he said.
The moribund antibiotic industry demonstrates how shrinking markets — with hospitals and doctors deliberately limiting the use of new drugs to reduce microbial resistance — lead to less investment, Garthwaite said.
Yet some experts argue that Medicare drug pricing negotiations could spur innovation if they steer companies away from drugs that modestly improve outcomes but can make a lot of cash in the current system of unchecked pricing.
In cancer, the biggest investment is in drugs that offer incremental benefits at high cost, says Dr. Vincent Rajkumar, an oncologist at the Mayo Clinic. He was the principal investigator on two large trials testing Ninlaro (ixazomib), a pill for multiple myeloma similar to the injectable drug Velcade (bortezomib). Although more convenient, Ninlaro is no longer effective, he said, and it costs about eight times more than generic bortezomib. A new multiple myeloma drug, Expovio (Selinexor), keeps patients progression-free for about four additional months; It costs $22,000 a month.
Most new cancer drugs only extend life for a short time, said Rajkumar, who helped organize a 2015 letter signed by 118 cancer experts calling for Medicare to have bargaining power. If forced to negotiate, “perhaps companies will 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,” Prince said. “Are we really so smart that we are right and everyone else is wrong? Are we really looking out for our public 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 significant pharmaceutical industry support, have sided in the debate over the language of the drug price negotiation bill.
Some other patient groups, worried that the industry would lose interest in drugs for smaller populations if prices fell, opposed the bill — and successfully won exceptions that would have prevented Medicare from negotiating drug prices for rare diseases.
David Mitchell, a multiple myeloma patient who founded Patients for Affordable Drugs in 2017, said he’s confident the bill won’t discourage innovation — and his life may depend on it. The 68-year-old says she is on a four-drug regimen but “cancer is very clever and finds ways to get around drugs.”
“The idea that taking a small bite out of pharma revenue will prevent them from developing new drugs is foolish,” he said.
Contact us Submit a story tip