Drug lobby, feeling heat from Capitol Hill, ramps up its rhetoric.
This article was first published on Friday, October 11, 2019 in MedPage Today.
By Joyce Frieden, News Editor, MedPage Today
WASHINGTON -- If the drug price bill sponsored by House Speaker Nancy Pelosi (D-Calif.) passes Congress, it will mean "lights out" for small start-up biopharmaceutical firms that depend on venture capital, Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), said Thursday.
"We don't want to overstate the case... but for the [drug development] ecosystem as a whole, this would be nuclear winter in places that depend on early-stage financing for biotech innovation," Ubl said during a press briefing at PhRMA's headquarters here.
Pelosi's bill, released Sept. 20, would:
- Allow the Secretary of Health and Human Services (HHS) to negotiate prices with drug manufacturers for 250 drugs annually for which there's no competition. The secretary will negotiate a maximum fair price that will be applied to the Medicare program, and will also be available to private insurers. The negotiated price will have an upper limit of 120% of the volume-weighted average price of six countries (Australia, Canada, France, Germany, Japan, and the U.K.)
- Establish a mandatory rebate for drug manufacturers of all drugs covered under Medicare Part B and Part D that increase their prices faster than inflation
- Cap out-of-pocket costs at $2,000 for Medicare beneficiaries enrolled in the Part D drug coverage program
"We still have lot of work to do in terms of ensuring we get to a balanced place at the end of this debate," Ubl said. "If you look at things like rebate reform, we think there is bipartisan interest in those policies. I think there is significant bipartisan support [for some provisions] but we're not there yet ... I don't think members are interested in our endorsements and there is going to be pain associated with those provisions, but I'd hope it would be the beginning of policymakers and others looking at industry in a different way."
Pelosi's bill "is a much more far-reaching proposal that could have a devastating impact on the industry and the patients we serve," he continued. For example, the bill's price-setting provision suggests that prices could be set for as few as 25 medications, "but the way it's drafted, it could allow for 250 medications per year... It wouldn't take long for the vast majority of medicines to become subject to this provision. It doesn't just apply to government programs but to the commercial market as well." In addition, "it's more coercion than negotiation because if the company does not accept the government price, there's a 95% tax on the product in question."
"We see the Pelosi package as innovation killer, as a job killer, and ultimately a hope killer for American patients waiting for better cures," said Ubl. "It's an innovation killer because it takes a $1 trillion hit on pharmaceutical innovators over 10 years."
Ubl also asserted the bill would cost 1 million jobs and quash industry research on difficult-to-treat diseases such as Alzheimer's and ALS.
Lori Reilly, JD, chief operating officer of PhRMA, discussed the association's concerns with the Part D provisions in the drug price bill passed by the Senate Finance Committee, which is chaired by Sen. Chuck Grassley (R-Iowa). She cited a new report from Avalere, a healthcare consulting firm, which found that the bill would increase drugmakers' liability for price discounts in the Part D program by an average of 69% -- but the percentage would be much higher for certain classes of drugs. For example, the discount liability for makers of antiretrovirals to treat HIV would increase more than eight-fold, or $1.82 billion, relative to the discounts paid today, while for certain respiratory drugs, the increase would be about 5.5-fold, or $240 million.
"Part of the concern is that this is sending the message that if you make these medications now or in the future, you face a very very high tax or penalty that you're going to have to face for potentially an unlimited period of time," she said, adding that some provisions in the Pelosi bill increase manufacturers' liability even more than that.
"We have been supportive of establishing an out-of-pocket cap in Part D; that's not the issue," Reilly added. "The issue is that we believe [the manufacturer liability] is too high."
Ubl had his own criticism of the Finance Committee bill, noting that it "siphons off $150 billion from industry R&D." However, when asked about it by MedPage Today, Ubl acknowledged that the bill doesn't specifically take money from drug companies' R&D budgets. Rather, "if it comes out of industry, we think a large share of it would come from R&D expenditures, because in general, there are fixed costs and there are discretionary costs, and R&D expenditures are the most discretionary expenditures a company can make," he said.
Not everyone agrees with the idea that the Pelosi bill would hurt small-cap startup companies. "Most of the money to fund preclinical trials (phase 1 and 2) [is] from the National Institutes of Health; this will not be affected by the legislation," Gerard Anderson, PhD, professor of health policy and management at Johns Hopkins University in Baltimore, said in an email. And the bill's price negotiation provisions "will only affect the best-selling drugs, so if it is a drug in a small market it will not be affected ... I can see that [these companies] will be concerned but it is unlikely to affect them."
Rep. Lloyd Doggett (D-Texas), chairman of the House Ways & Means Health Subcommittee, took issue with PhRMA's criticism of the Pelosi bill. "To describe this narrow bill as producing 'nuclear winter' makes one wonder what cataclysmic term would be applied to genuinely comprehensive negotiation legislation," Doggett said in a statement. "This grim term better describes the fallout from monopoly prices which patients are suffering."
“We don't want to overstate the case... but for the [drug development] ecosystem as a whole, this would be nuclear winter in places that depend on early-stage financing for biotech innovation. ”
PhRMA CEO and President Stephen Ubl
Pelosi's bill would allow HHS to negotiate prices with drug manufacturers for 250 drugs annually for which there's no competition.
PhRMA says the bill would cripple innovation and research, and devastate small start-up biopharmaceutical firms that rely upon venture capital.
The bill would cost 1 million jobs and quash industry research on difficult-to-treat diseases such as Alzheimer's and ALS.