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Analysis: US moves to negotiate drug prices in rare defeat for Big Pharma

WASHINGTON, Aug 12 (Reuters) – Big pharma has spent more than any other industry to lobby Congress and federal agencies this year, a Reuters analysis shows, but is still on course for a major defeat by failing to block a bill that would allow the government. Negotiated prices of selected medicines.

Although the pharmaceutical industry spent at least $142 million on lobbying efforts, the $430 billion Inflation Relief Act to change climate, health and tax policies cleared its biggest hurdle when Democratic lawmakers passed the Senate last week. Read more

The US House of Representatives is also expected to pass it on Friday, allowing President Joe Biden to sign it into law.

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Its legislation represents a rare legislative defeat for the pharmaceutical industry and sets a new precedent for suppressing drug prices in the world’s most lucrative market for drugs, according to congressional and industry officials.

“This is an important first step,” Democratic Senator Patty Murray, chairwoman of the Senate Health Committee, told Reuters. “This is the first time we’ve been able to take a step like this to lower prices on drugs … It sets the stage for us to do more.”

Health policy experts say the bill reflects the pharma industry’s weakening influence over the Democratic Party, and its main argument against price negotiation — which stifles innovation — is no longer persuasive to the public.

An October Kaiser Family Foundation poll found that 83% of Americans, including 95% of Democrats and 71% of Republicans, want the federal Medicare health plan to negotiate prices for seniors.

“The pharma guys were quick to throw everything but the kitchen sink against this,” said Senator Ron Wyden, the Democrat who chairs the Finance Committee.

The industry’s strongest trade association, the Pharmaceutical Research and Manufacturers of America (PhRMA), urged senators in a public letter to reject the bill. Its president, Stephen Ubl, told Politico that lawmakers who vote “don’t get a free pass.”

“Few associations have all the tools of modern political advocacy at their disposal the way PhRMA does,” he said.

A PHRMA spokesperson said the group will continue to work with all legislators. He did not address Ubl’s comments on holding legislators accountable.

“We may not agree on every issue, but we believe engagement and dialogue are important to fostering innovation, a highly skilled workforce and a policy environment that supports patient access to life-saving drugs,” spokesman Brian Newell said in an email.

Pharma Scheme

A Reuters analysis of OpenSecrets’ lobbying and campaign contribution data found the pharmaceutical industry spent at least $142.6 million lobbying Congress and federal agencies in the first half of 2022, more than any other industry and at least $16.1 million in the current midterm election cycle, which began in January 2021.

About two-thirds of the money spent on lobbying, about $93 million, came from PhRMA and its member companies.

It argued that drug promotions do not contribute to inflation, with drug prices rising an average of 2.5% over the past year, compared to a 17% rise in health insurance prices.

Critics say the statistics conflate higher-priced brand-name drugs with lower-priced generics, masking the impact on patient costs. A KFF study estimates that the prices of nearly half of all Medicare-covered drugs will increase faster than inflation in 2020.

The industry has long warned that price restrictions in the US market could hamper its ability to invest in developing new drugs.

With the help of industry-backed Democrats, the bill’s provision for drug price negotiations was rolled back in November, allowing Medicare to focus on a maximum of 20 expensive drugs annually through 2029, rather than 250 early-proposal treatments to help lower prices.

The most dramatic curbs opponents are Senator Kirsten Sinema and Representative Scott Peters, the two biggest recipients of industry donations, more than $201,000 and $320,000 respectively, according to OpenSecrets data.

“We’ve created a better place for investors to recoup their investment, which is constantly going to develop new drugs,” Peters told Reuters.

“I still think they got it right on this one.”

what now

Democratic staffers, industry executives and policy experts said the bill’s widespread popularity, combined with pressure on Democrats to pass meaningful legislation ahead of midterm elections in November, helped it overcome the pharma industry’s campaign.

“I guess with this vote, pharma realizes they don’t have a lot of friends among Democrats,” said Larry Levitt, vice president of health policy at KFF. “Pharma sees this as the camel’s nose under the tent, and it probably is.”

Policy experts said the industry would try to mitigate the effects of the bill as much as possible.

“They litigate it through the courts. And they try and change the legislation,” said Mark Miller, a former government health policy official who is now executive vice president of healthcare at Arnold Ventures.

It remains to be seen how much the bill will scare investors, many of whom consider pharmaceutical stocks safe bets during economic downturns.

“Sentiment for US pharma is at multi-year highs and we do not see IRA drug reform as significantly changing investor positioning,” a JPMorgan analyst note said.

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Reporting by Ahmed Aboulein; Additional reporting by Richard Cowan in Washington and Lewis Krauskopf in New York; Edited by Michael Gershberg and Deepa Babington

Our criteria: Thomson Reuters Trust Principles.

Ahmed Aboulin

Thomson Reuters

Washington-based reporter covering US health and pharmaceutical policy, focusing on agencies such as the Department of Health and Human Services and the Food and Drug Administration, formerly based in Iraq and Egypt.

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