Sen­ate Dems cling to a sim­ple ma­jor­i­ty to pass some of the biggest drug pric­ing re­forms ever

The Phar­ma­ceu­ti­cal Re­search and Man­u­fac­tur­ers of Amer­i­ca — and their fleet of drug in­dus­try lob­by­ists on Capi­tol Hill — are known for nev­er los­ing.

When­ev­er a big drug pric­ing bill comes up, an army of the in­dus­try group’s lob­by­ists de­scend on­to the Hill and ei­ther smash it out­right or dis­man­tle it piece by piece.

But for per­haps the largest drug pric­ing re­forms ever en­act­ed, af­ter more than a decade of Con­gress try­ing and fail­ing to al­low Medicare to ne­go­ti­ate pre­scrip­tion drug prices, those same lob­by­ists and their bio­phar­ma clients were dealt a stun­ning blow on Sun­day af­ter­noon.

Sen­ate De­moc­rats sal­vaged all 50 of their seats (plus Vice Pres­i­dent Ka­mala Har­ris to break the tie) to hold off Re­pub­li­can amend­ments af­ter more than a dozen hours of overnight vot­ing to pass a wider-rang­ing tax and cli­mate bill.

The win for the Sen­ate Dems, tee­ing up an­oth­er par­ti­san thumbs-up vote in the House this Fri­day and a guar­an­teed Pres­i­dent Joe Biden sig­na­ture, means that for the first time ever, the fed­er­al gov­ern­ment will be able to ne­go­ti­ate and/or set prices on some of the most ex­pen­sive drugs that, via its Cen­ters for Medicare and Med­ic­aid Ser­vices, it pays for.

The bill al­so caps se­niors’ out-of-pock­et spend­ing for pre­scrip­tion drugs at $2,000 per year — a his­toric move as some se­niors on cer­tain treat­ments spend up­wards of $2,000 per month on their drugs.

Ron Wyden

“For too long, Medicare has been forced to con­tend with Big Phar­ma with one hand tied be­hind its back – that ends when this bill is signed in­to law,” Sen­ate Fi­nance Com­mit­tee Chair Ron Wyden (D-OR) said in a state­ment af­ter the win. “I have been spot­light­ing how the drug pric­ing sys­tem is bro­ken top to bot­tom. At last, the Sen­ate has be­gun to re­de­fine the re­la­tion­ship be­tween Medicare and Big Phar­ma.”

Dems in the House are ea­ger to fol­low their Sen­ate col­leagues’ foot­steps, with Rep. Frank Pal­lone (D-NJ), chair of the En­er­gy & Com­merce Com­mit­tee, adding in a state­ment,

Near­ly 20 years ago Re­pub­li­cans pre­vent­ed the fed­er­al gov­ern­ment from ne­go­ti­at­ing fair prices for se­niors, and the In­fla­tion Re­duc­tion Act re­vers­es that egre­gious gift to Big Phar­ma, which will save se­niors and Medicare mon­ey. This leg­is­la­tion fi­nal­ly lev­els the play­ing field and will help en­sure se­niors are no longer price gouged at the phar­ma­cy counter. It al­so pe­nal­izes Big Phar­ma com­pa­nies for un­fair­ly hik­ing prices on se­niors.

But the CMS ne­go­ti­a­tions on drug pric­ing have al­so been crit­i­cized as a slip­pery slope to wider, Eu­ro­pean-style price con­trols, clos­ing off the bio­phar­ma in­dus­try’s biggest mar­ket, even if the passed ne­go­ti­a­tions will at first be lim­it­ed to about 60 drugs be­tween 2026 and 2029, and on­ly for drugs and bi­o­log­ics that have al­ready been mar­ket­ed for about a decade or more.

PhRMA fumed over the ne­go­ti­a­tions, with CEO Stephen Ubl say­ing in a state­ment yes­ter­day:

This drug pric­ing plan is based on a litany of false promis­es. They say they’re fight­ing in­fla­tion, but the Biden ad­min­is­tra­tion’s own da­ta show that pre­scrip­tion med­i­cines are not fu­el­ing in­fla­tion. They say this is “ne­go­ti­a­tion,” but the bill gives the gov­ern­ment unchecked au­thor­i­ty to set the price of med­i­cines. And they say the bill won’t harm in­no­va­tion, but var­i­ous ex­perts, biotech in­vestors and pa­tient ad­vo­cates agree that this bill will lead to few­er new cures and treat­ments for pa­tients bat­tling can­cer, Alzheimer’s and oth­er dis­eases.

And while PhRMA and oth­ers have said the bill will dev­as­tate bio­phar­ma in­no­va­tion, track­ing those changes over time will be dif­fi­cult.

The Con­gres­sion­al Bud­get Of­fice ini­tial­ly said 10 drugs would be lost out of a to­tal of 1,300 drug ap­provals over the next three decades, but then quick­ly re­vised that num­ber to 15 drugs, rais­ing ques­tions about its pro­jec­tion sys­tem. But Eli Lil­ly CEO David Ricks re­cent­ly said his com­pa­ny would lose about 15 drugs from its own pipeline due to this bill.

The CBO al­so re­cent­ly said that phar­ma com­pa­nies might just jack up their launch prices for new drugs to make up for the lat­er ex­pect­ed loss­es.

The bill “would in­crease the launch prices for drugs that are not yet on the mar­ket rel­a­tive to what such prices would be oth­er­wise. That ef­fect would pri­mar­i­ly be dri­ven by the in­fla­tion-re­bate pro­vi­sions (sec­tions 129101 and 129102), which would be­gin to ap­ply to prices with­in 12 months of a giv­en drug’s en­ter­ing the mar­ket. Un­der those pro­vi­sions, man­u­fac­tur­ers would have an in­cen­tive to launch new drugs at a high­er price to off­set slow­er growth in prices over time. The ne­go­ti­a­tion pro­vi­sion (sec­tion 129001) would have less of an im­pact on launch prices,” CBO said in a let­ter to House lead­ers on Thurs­day.

But be­fore the fi­nal vote Sun­day, the leg­is­la­tion was slight­ly tweaked by the Sen­ate par­lia­men­tar­i­an on Sat­ur­day, deal­ing De­moc­rats a blow on the size of those in­fla­tion-re­bate pro­vi­sions.

“I am dis­ap­point­ed that the cal­cu­la­tion for the Medicare in­fla­tion re­bate that in­clud­ed com­mer­cial units sold was ruled out of com­pli­ance, but the leg­is­la­tion nev­er­the­less puts a sub­stan­tial check on Big Phar­ma’s abil­i­ty to price gouge,” Sen. Wyden said in an emailed state­ment.

Pro­jec­tions on how much that par­lia­men­tar­i­an tweak will im­pact bio­phar­ma’s new drug prices, and bot­tom lines, were sim­i­lar­ly com­pli­cat­ed and couched in oth­er pro­jec­tions, par­al­lel­ing the com­plex­i­ties of the en­tire US drug pric­ing sys­tem.

De­moc­rats al­so lost out on in­clud­ing a key piece of House-passed leg­is­la­tion that would cap in­sulin costs for all in­sured di­a­bet­ics at $35 per month, a move fa­vored by in­sulin gi­ants Eli Lil­ly and Sanofi.

Dems failed to muster the 60 votes re­quired to keep that cap in the bill, nab­bing just 57, with the help of Re­pub­li­can Sens. Bill Cas­sidy (LA), Su­san Collins (ME), Josh Haw­ley (MO), Cindy Hyde-Smith (MS), John Kennedy (LA), Lisa Murkows­ki (AK) and Dan Sul­li­van (AK). Now, the bill on­ly caps in­sulin out-of-pock­et spend­ing for Medicare pa­tients, just a small frac­tion of whom pay more than $35 per month.

Over­all, how­ev­er, pro­gres­sive groups and Dems cheered the re­forms kept in the pack­age as his­toric.

David Mitchell, a can­cer pa­tient and founder of Pa­tients For Af­ford­able Drugs Now, said in a state­ment, “The Sen­ate made his­to­ry to­day with pas­sage of the In­fla­tion Re­duc­tion Act, which will low­er pre­scrip­tion drug prices, im­prove health, fight in­fla­tion, and help Amer­i­cans keep mon­ey in their pock­ets. The pro­vi­sions help en­sure pa­tients will get the in­no­v­a­tive new drugs we need at prices we can af­ford.”

Lau­ra and John Arnold, bil­lion­aire co-founders of the phil­an­thropy Arnold Ven­tures, sim­i­lar­ly added:

Al­low­ing Medicare to ne­go­ti­ate for the prices of cer­tain drugs and cap­ping out-of-pock­et costs in the pro­gram take steps to­ward mean­ing­ful­ly im­prov­ing af­ford­abil­i­ty while main­tain­ing in­cen­tives for true in­no­va­tion. Pre­scrip­tion drugs don’t work if pa­tients can’t af­ford them – yet to­day near­ly 1 in 3 Amer­i­cans finds them­selves un­able to pay for the med­ica­tions they need. It is dis­ap­point­ing, how­ev­er, that the in­fla­tion re­bate pro­vi­sions in­tend­ed to keep rapid price es­ca­la­tions in check won’t ul­ti­mate­ly be ex­tend­ed to all Amer­i­cans.

As far as which par­tic­u­lar drugs might see the biggest hit on their prof­its as the bill takes ef­fect, SVB Se­cu­ri­ties ex­plained to in­vestors re­cent­ly how more than a dozen drugs from Eli Lil­ly, As­traZeneca, Ab­b­Vie and J&J, would lose out just be­fore their gener­ic/biosim­i­lar com­peti­tors hit the mar­ket.

The Fac­tors Dri­ving a Rapid Evo­lu­tion of Gene & Cell Ther­a­py and CAR-T Clin­i­cal Re­search in APAC

APAC is the fastest growing region globally for cell & gene therapy trials representing more than a third of all cell & gene studies globally, with China leading in the region. 

APAC is the leading location globally for CAR-T trials with China attracting ~60% of all CAR-T trials globally between 2015-2022. The number of CAR-T trials initiated by Western companies has rapidly increased in recent years (current CAGR of about 60%), with multiple targets being explored including CD19, CD20, CD22, BCMA, CD30, CD123, CD33, CD38, and CD138.

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Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Reading about John Carroll’s pick of biotech’s most promising startups has become a treasured tradition. If you ever get curious about previous classes of the Endpoints 11, you can find all of them (plus a number of our other regular specials) here.

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Solicitor General Elizabeth Prelogar

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Vas Narasimhan, Novartis CEO (Simon Dawson/Bloomberg via Getty Images)

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