As JPMorgan madness subsides, Democrats will unveil a legislative package to address drug price hikes
On the night before the start of JP Morgan — a conference where biopharma executives big and small waxed lyrical about innovation, adorned with name badges featuring a gold DNA capsule — President Donald Trump tweeted his displeasure that drugmakers were not honoring their promises to rein in prices. He wasn’t wrong. Data suggest drugmakers have returned to business as usual. And now, after Democrats clawed back control of the House, they’re expected to unveil a legislative package today to address what the White House has so far attempted in vain to do: cut prices for prescription drugs.
"Let's try to defuse some of the concerns about drug pricing at #JPM19."
"Sounds good! What should the logo be?"
"How about a solid-gold pill?" pic.twitter.com/EqR8LhFFXD
— Brian Reid (@brianreid) January 7, 2019
At least three bills are being touted in the package — including one revealed last November from Senator Bernie Sanders and Representative Ro Khanna that asserts Americans should not pay more for prescription drugs than the median price in five major countries, resembling a Trump administration proposal presented the preceding month. Other parts of the legislation proposes allowing HHS to negotiate prices for Medicare Part D directly with drugmakers, instead of middlemen like pharmacy benefit managers — as well as importing medicines at a lower price from countries such as Canada.
Last year, under pressure from the Trump administration and in response to public outrage, a number of high profile drugmakers made pledges to freeze prices. Since then, the Trump administration has also introduced two proposals to temper prices. But despite intensifying political and media scrutiny, drugmakers have returned to hikes on at least a portion of their portfolio. That in turn has triggered an intense public backlash, which is driving this new legislative onslaught.
The pharmaceutical industry, along with its well connected lobby, has vehemently fought against proposals to import overseas prices, suggesting such schemes will stifle innovation and potentially usher unsafe medicines into the country.
Stephen Ubl, CEO of PhRMA, at an Endpoints News event at the 2019 JP Morgan conference Jeff Rumans for Endpoints News
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However, data show that despite the high cost of healthcare, the United States actually performs worse across various health measures versus a number of other high-income nations. And Americans themselves are desperately seeking change: attacking drug price gouging is one of the few subjects that has widespread bipartisan support. According to a recent Politico/Harvard poll, an overwhelming majority of Americans ranked addressing the cost of medicines as a top priority for the new Congress.
On Wednesday, former Lilly executive and HHS secretary Alex Azar tweeted: “For those listening in the pharmaceutical industry: The list price increases must stop. Prices must start coming down.”
Maintaining the status quo, where higher priced drugs are more competitive and patients pay more, is unacceptable. Companies that announced price increases in January admitted they were doing so to funnel payments back to PBMs in order to keep the preferred status of their drugs.
— Secretary Alex Azar (@SecAzar) January 9, 2019
But analysts are not as convinced political pressure will have the impact some anticipate. Bernstein’s Ronny Gal in a note in November 2018 wrote: “pharma does not have to be as nice to POTUS now that CMS has policy ideas that are antithetical to industry interest…At the very least, threatening to raise prices gives industry a bargaining chip to negotiate some of these policies away.” More recently in January, Cowen analysts published a survey of US drug buyers — including HMOs, PBMs and hospitals who collectively bought more than $42 billion in drugs in 2017 — to ascertain the momentum of US drug prices over the next 3 years.
“Respondents expect U.S. brand drug prices will continue to rise over the next 3 years, at a rate similar to the past,” the analysts found.
When asked about the flurry of debate surrounding the issue of pricing, BioMarin chief Jean-Jacques Bienaime said “It’s not a real problem; it’s all politics” in an interview with Bloomberg on the eve of JP Morgan.