WASHINGTON — Pharmaceutical industry representatives said Wednesday that proposals now being considered on Capitol Hill to lower patients’ prescription drug costs likely will have damaging effects on new drug development and on patients’ access to new medications.

As part of a $3.5 trillion infrastructure bill, “lawmakers want to offset this amount of new spending by allowing federal officials to ‘negotiate’ prices for prescription drugs,” Steve Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), a lobbying group for the pharmaceutical industry, said during a press briefing. “We know how the story ends when the government gets into the business of setting prices.”

“In countries where governments do set the price, patients often have delayed access, if access at all” to new treatments, he continued. While Americans have access to about 90% of all FDA-approved new treatments and cures, “if you look at other countries with government price-setting, in the U.K. it’s about 60% [access], in France, 48% and Canadians have 44% access to the treatments that are readily available to Americans.”

Ubl acknowledged that the current system needs to be changed, “and we’ve put forward to our own ideas on modernizing Medicare and making insurance work like insurance again. We’re not for the status quo … We’re willing to come to the table in good faith, and work with lawmakers on better policies.”

Specifically, the industry is concerned about H.R. 3, the Elijah E. Cummings Lower Drug Costs Now Act, which would require the Department of HHS to negotiate prices for certain single-source, brand-name drugs that don’t have generic competition. The negotiated maximum price may not exceed 120% of the average price in five countries — Australia, Canada, France, Germany, Japan, and the U.K. The negotiated prices must be offered under Medicare and may also be offered under private health insurance.

The bill also requires drug manufacturers to issue rebates to CMS for covered drugs that cost $100 or more and for which the average manufacturer price increases faster than inflation, and reduces the annual out-of-pocket drug spending threshold for Medicare beneficiaries.

Ken Frazier, executive chairman of Merck’s board of directors, warned about the negative effect that H.R. 3 might have on drug research and development (R&D).

“If we choose to make the choices inherent in H.R. 3, it will mean that we will lose that substantial funding for R&D, which means we will forego many important discoveries that will have an impact not just on the economy, not just on this industry, but on the many people who are waiting for those cures and treatments to come forward,” he said. “There’s simply no way to sustain today’s research budgets under these scenarios.”

PhRMA board chairman David Ricks noted that the bill would “extract $600 billion — with a B — dollars from an industry that annually, has about $350 billion in sales. So this is a huge reduction over the course of 10 years, but it also directs the Congress to look at ways to reduce prices across the entirety of the U.S. marketplace — not just the government formularies.”

“Our estimates are that it would be a $1.5 trillion cost to our industry over the course of 10 years, raising only $600 billion for the government. That’s inefficient, and it will have a significant secondary effect on our industry,” he added.

Ricks, who is also chairman and CEO of drugmaker Eli Lilly said that his organization and member companies “want to be part of a solution that will lower out-of-pocket costs for patients for the innovative medicines our industry makes, but we cannot support and will not support policies that also restrict patient access and destroy our ability to develop the next generation of innovative new products.”

Seniors are concerned about the bill’s potential effects as well, he added, citing a February 2019 Kaiser Family Foundation poll of a nationally representative sample of 1,440 adults ages 18 and older.

“Even the Kaiser Family Foundation, who often does polling that we don’t agree with … polled seniors about whether they want to go to negotiation, 65% oppose negotiation when they understand it will reduce access to new medicines,” Ricks noted.

Those poll results contrast with a poll released in June by Gallup and West Health, a group of nonpartisan organizations focused on lowering healthcare costs. That poll, which included a nationally representative sample of more than 3,700 American adults, found that nearly all Democrats (97%) and the majority of Republicans (61%) supported price negotiation by the federal government, and less than 20% of all Americans believe Medicare negotiation would hurt innovation or market competition.

“Americans aren’t buying the claim that attempts to reign in drug prices will stifle innovation and devastate the pharmaceutical industry,” Tim Lash, West Health’s chief strategy officer, said in a statement. “These misleading arguments are meant to preserve profits rather than protect patients. The time has come to finally enable Medicare negotiation. Americans are becoming increasing[ly] restless for it to happen, even if the pharmaceutical companies are not.”

At the briefing, PhRMA officials did not discuss any specifics of their plans for lowering drug prices, but the organization’s website lists several proposals, including instituting caps on annual out-of-pocket costs for beneficiaries in the Medicare Part D prescription drug program, sharing savings from drug rebates with patients at the pharmacy counter rather than giving the rebates to insurers, and using a “market-based adjustment” system to lower some drug prices under the Medicare Part B program.

Last Updated September 08, 2021