Analysis: US decision to negotiate drug prices is a rare defeat for Big Pharma

WASHINGTON, Aug 12 (Reuters) – Big Pharma has spent more than any other industry lobbying Congress and federal agencies this year, according to a Reuters analysis, but still suffered a major defeat after failing to stop a bill allowing the government to negotiate prices on select drugs.

Despite the pharmaceutical industry spending at least $142 million on lobbying efforts, the $430 billion Inflation Cut Act to change climate, health and tax policies will become law. It cleared its biggest hurdle last week with its passage through the Senate, with no Republicans joining Democrats in voting for the bill, followed by its passage through the U.S. House of Representatives on Friday. Read more

President Joe Biden will sign it next week. Read more

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The bill’s impending enactment represents a rare legislative defeat for the pharmaceutical industry and sets a precedent for lower drug prices in the world‘s most lucrative market for drugs, according to congressional and industry officials. .

“This is a major first step forward,” Democratic Senator Patty Murray, chair of the Senate Health Committee, told Reuters. “This is the first time we’ve been able to take this kind of step to lower pharmaceutical prices…which will prepare us to do more.”

Health policy experts say the bill reflects the pharmaceutical industry’s weakening influence over the Democratic Party and that its main argument against price negotiation — that it stifles innovation — is n is more convincing to the public.

A Kaiser Family Foundation poll in October found that 83% of Americans, including 95% of Democrats and 71% of Republicans, want federal health plan Medicare for seniors to negotiate prices, a provision of the bill. .

“The pharmaceutical guys have upped the ante by throwing everything but the kitchen sink against this,” said Sen. Ron Wyden, a Democrat who chairs the Finance Committee.

The powerful industry trade association, Pharmaceutical Research and Manufacturers of America (PhRMA), urged senators in a public letter to reject the bill. Its chairman, Stephen Ubl, told Politico that lawmakers who vote for him “won’t get a free pass.”

“Few associations have all the tools of modern political advocacy like the PhRMA does,” he said.

A PhRMA spokesperson said the group would continue to work with all lawmakers. He did not respond to Ubl’s comments about holding lawmakers accountable.

“We may not agree on all issues, but we believe that engagement and dialogue are important to promote a policy environment that supports innovation, a highly skilled workforce and the access to life-saving medicines for patients,” spokesman Brian Newell said in an email.


A Reuters analysis of OpenSecrets lobbying and campaign contribution data shows that the pharmaceutical industry spent at least $142.6 million lobbying Congress and federal agencies in the first half of 2022, more than any other industry, and at least $16.1 million in campaign contributions during the current midterm election cycle that began in January 2021.

Almost two-thirds of the money spent on lobbying, or about $93 million, came from PhRMA and its member companies.

The pharmaceutical campaign argued that prescription drugs do not contribute to inflation, citing an average increase of 2.5% in drug prices over the past year compared to a 17% increase in drug prices. health insurance.

Critics say the figures combine high-priced branded drugs with much cheaper generics, obscuring the impact on costs for patients. A KFF study estimated that prices rose faster than inflation for half of all Medicare-covered drugs in 2020.

The industry has long warned that price restrictions in the US market would hamper companies’ ability to invest in the development of new drugs.

With the help of industry-backed Democrats, the bill’s provision for drug price negotiations was scaled back in November, allowing Medicare to focus on an annual maximum of 20 of the country’s most expensive drugs. by 2029, instead of an initial proposal to reduce the prices of 250 drugs. treatments.

Opponents of the most dramatic restrictions included Senator Kyrsten Sinema and Representative Scott Peters, two of the industry’s largest donation recipients, at more than $201,000 and $320,000, respectively, according to OpenSecrets data.

“We have created a good space for investors to recoup their investment which has continually sought to develop new drugs,” Peters told Reuters.

“I still think they did well.”


Democratic staffers, industry executives and policy experts said the bill’s wide popularity, combined with pressure on Democrats to pass meaningful legislation before the midterm elections in November, helped overcome the campaign of the pharmaceutical industry.

“With this vote, I imagine Pharma realizes that it doesn’t have many friends left among the Democrats,” said Larry Levitt, vice president of health policy at KFF. “Pharma sees this as the camel’s nose under the tent, and it probably is.”

The industry will likely try to mitigate the effects of the bill as much as possible, policy experts said.

“They will take this to court. And they will try, I guess, to change the legislation” in the future, said Mark Miller, a former government health policy official who is now executive vice president of care. health at Arnold Ventures.

The extent to which the bill could stoke investor fear remains to be seen, given that many consider pharmaceutical stocks to be among the safest bets in an economic downturn.

“Sentiment is at a multi-year high for US Pharma and we do not view the IRA drug reform as a significant change in investor positioning,” said a note from JPMorgan analysts.

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Reporting by Ahmed Aboulenein; Additional reporting by Richard Cowan in Washington and Lewis Krauskopf in New York; Editing by Michele Gershberg, Deepa Babington and Leslie Adler

Our standards: The Thomson Reuters Trust Principles.

Ahmed Aboulenein

Thomson Reuters

Washington-based correspondent covering U.S. health and pharmaceutical policy, with a focus on the Department of Health and Human Services and the agencies it oversees, such as the Food and Drug Administration, previously based in Iraq and Egypt.

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