According to KFF, 80% of voters want lower drug prices. The Inflation Reduction Act was the first step, allowing the government to negotiate drug prices for Medicare. How has the drug industry responded? With contempt for the general public and trying to shift blame.
The Inflation Reduction Act is a signature legislative achievement for people who want to see lower drug prices. Medicare is the federal health insurance program for older and disabled people; the provisions allowing it to negotiate prices are expected to save the government an estimated $98.5 billion over a decade while lowering insurance premiums and out-of-pocket costs for many older Americans.
The drug industry, though, wants their profits. According to the Times on Tuesday, Johnson & Johnson became the latest drugmaker to take the Biden administration to federal court in an attempt to put a halt to the drug pricing program. Three other drug companies — Merck, Bristol Myers Squibb, and Astellas Pharma — have filed their lawsuits, as have the industry’s leading trade group and the U.S. Chamber of Commerce.
The suits make similar and overlapping claims that the drug pricing provisions are unconstitutional. They are scattered in federal courts around the country — a tactic that experts say gives the industry a better chance of obtaining conflicting rulings that will put the legal challenges on a fast track to a business-friendly Supreme Court. If that’s the case, then every manufacturer will file similar suits.
The industry fears that Medicare will, in effect, set the bar for all payers and that once the government’s lower prices are made public, pharmacy benefit managers negotiating on behalf of the privately insured will have more leverage to demand deeper discounts.
NY Times
The pharmaceutical industry is waging a public relations offensive. The industry trade group that filed one of the lawsuits, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, is running advertisements targeting pharmacy benefit managers, and industry executives are publicly arguing that the drug pricing provisions will lead to fewer cures. The implication is clear: Lower prices will mean a dent in revenues, discouraging companies from developing certain drugs. Not true.
The Congressional Budget Office estimated that the law would result in only one fewer drug approval over a decade and about 13 fewer drugs over the next 30 years. In addition, many new drugs “are not offering clinically meaningful benefit over existing drugs,” said Ameet Sarpatwari, an expert in pharmaceutical policy at Harvard Medical School.
“To me, Medicare is doing what it should do,” said Georgetown professor Mr. Gostin. “It’s a huge product buyer, and it’s basically using that clout, that bargaining power, to get the best price.” The drug industry “is throwing the kitchen sink at the government,” he added. “They’re looking for what sticks, and their arguments are directly targeted at the Supreme Court.”
SCOTUS has been very understanding of some arguments regarding matters like these. The drug companies are hoping that SCOTUS bends to their reasoning.
Then some companies play the patent game.
According to the Times, in 2004, Gilead Sciences decided to stop pursuing a new H.I.V. drug. The public explanation was that it wasn’t sufficiently different from an existing treatment to warrant further development. In private, though, something else was at play. Gilead had devised a plan to delay the new drug’s release to maximize profits, even though executives had reason to believe it might be safer for patients, according to a trove of internal documents made public in litigation against the company.
The delayed release of the new treatment is now the subject of state and federal lawsuits. Some 26,000 patients who took Gilead’s older H.I.V. drugs claim that the company unnecessarily exposed them to kidney and bone problems.
Gilead’s apparent maneuver with tenofovir is so common in the pharmaceutical industry that it has a name: product hopping. Companies ride out their monopoly on medication, and then, shortly before the arrival of generic competition, they switch — or “hop” — patients over to a more recently patented version of the drug to prolong the monopoly.
The drug maker Merck, for example, is developing a version of its blockbuster cancer drug Keytruda that can be injected under the skin and is likely to extend the company’s revenue streams for years after the infused version of the drug faces its first competition from other companies in 2028. (Julie Cunningham, a spokeswoman for Merck, denied that it is engaged in product hopping and said the new version is “a novel innovation aimed at providing a greater level of convenience for patients and their families.”)
“There’s something profoundly wrong that happened here,” said Mr. Morten, who provides pro bono legal services to an H.I.V. advocacy group that in 2019 unsuccessfully challenged Gilead’s efforts to extend the life of its patents. “The patent system actually encouraged Gilead to delay the development and launch of a new product.”
In a September 2003 memo that described how Gilead would develop the newer formulation to “replace” the original, with development “timed such that it is launched in 2015.” In a best-case scenario, company analysts calculated their strategy would generate more than $1 billion in annual profits between 2018 and 2020.
WTF is going on here?!
The drug industry is playing the system for shareholders, and Wall Street, taxpayers, and patients will be damned. The drug industry is paying a lot of money to go after PBMs and even if they are part of the problem the drug industry needs their profits to keep growing to entice analysts.
You should be angry and shocked. The drug industry is begging politicians to come after them with their casual disregard for the public.