PhRMA warns of dire consequences if Medicare is allowed to negotiate drug prices

WASHINGTON – Pharmaceutical industry representatives said on Wednesday that proposals currently under consideration at Capitol Hill to reduce patient prescription drug costs are likely to have detrimental effects on the development of new drugs and on patients’ access to new drugs. new drugs.

Under a $ 3.5 trillion infrastructure bill, “lawmakers want to offset this amount of new spending by allowing federal officials to” negotiate “prescription drug prices,” Steve Ubl, chairman – CEO of Pharmaceutical Research and Manufacturers of America (PhRMA), a lobby group for the pharmaceutical industry, said at a press briefing. “We know how the story ends when the government gets into pricing.”

“In countries where governments set the price, patients often have delayed access, if at all” to new treatments, he continued. While Americans have access to about 90% of all new FDA-approved treatments and remedies, “if you look at the other countries where prices are set by the government, in the UK it’s about 60%. [access], in France, 48% and Canadians have 44% access to treatments that are readily available to Americans. “

Ubl recognized that the current system needs to be changed, “and we put forward our own ideas on modernizing Medicare and making insurance work like insurance again. We are not for the status quo … We are ready to come to the table in good faith and work with lawmakers on better policies. ”

Specifically, the industry is concerned about HR 3, the Elijah E. Cummings Lower Drug Costs Now Act, which would require the HHS department to negotiate the prices of certain single-source brand-name drugs that do not have generic competition. . The maximum negotiated price cannot exceed 120% of the average price in five countries: Australia, Canada, France, Germany, Japan and United Kingdom. Negotiated prices must be offered under Medicare and may also be offered under private health insurance.

The bill also requires drug manufacturers to give discounts to CMS for covered drugs that cost $ 100 or more and for which the manufacturer’s average price is rising faster than inflation, and lowers the annual spending threshold. in drugs for Medicare beneficiaries.

Ken Frazier, executive chairman of the board of Merck, warned of the negative effect HR 3 could have on drug research and development (R&D).

“If we choose to make the choices inherent in HR 3, it will mean that we will lose this substantial funding for R&D, which means that we will forego many important discoveries that will impact not just the economy, not just the economy. industry, but on the many people who are waiting for these remedies and treatments to be offered, ”he said. “There is simply no way to sustain today’s research budgets in these scenarios.”

PhRMA board chairman David Ricks noted that the bill would “extract $ 600 billion – with a B – in dollars from an industry that has around $ 350 billion in sales annually.” So that’s a huge 10-year cut, but he’s also asking Congress to look for ways to cut prices across the entire US market, not just government forms. “

“Our estimates are that it would cost our industry $ 1.5 trillion over a 10 year period, raising only $ 600 billion for the government. It is inefficient and will have a significant side effect on our industry,” he said. he added.

Ricks, who is also president and CEO of drugmaker Eli Lilly, said his organization and member companies “want to be part of a solution that will lower out-of-pocket costs to patients for innovative drugs made by our industry, but we cannot and will not support policies that also restrict patient access and destroy our ability to develop the next generation of new innovative products. “

Seniors are also concerned about the potential effects of the bill, he added, citing a February 2019 Kaiser Family Foundation survey of a nationally representative sample of 1,440 adults between the ages of 18 years and over.

“Even the Kaiser Family Foundation, which often does polls with which we do not agree (…) asked older people about their willingness to negotiate, 65% oppose negotiation when they understand that this will reduce access to new drugs, ”Ricks noted. .

These poll results contrast with a poll released in June by Gallup and West Health, a group of non-partisan organizations focused on reducing healthcare costs. This poll, which included a nationally representative sample of more than 3,700 American adults, found that almost all Democrats (97%) and the majority of Republicans (61%) supported the federal government’s price negotiation , and less than 20% of all Americans. believe that negotiating Medicare would hurt innovation or competition in the marketplace.

“Americans do not believe the claim that attempts to rule drug prices will stifle innovation and devastate the pharmaceutical industry,” West Health chief strategy officer Tim Lash said in a statement. “These deceptive arguments are aimed at preserving profits rather than protecting patients. Now is the time to finally allow Medicare to be negotiated. More and more Americans are coming.[ly] agitated to make this happen, even if the drug companies are not. “

At the briefing, PhRMA officials did not discuss any details of their plans to reduce drug prices, but the organization’s website lists several proposals, including putting caps on reimbursable annual expenses for beneficiaries of the Medicare Part D prescription drug program, sharing savings from patient drug rebates at the pharmacy counter rather than giving the rebates to insurers, and using a “system” market-based adjustment “to lower certain drug prices under the Medicare Part B program.

Last updated on September 08, 2021

  • Joyce Frieden oversees Washington’s coverage of MedPage Today, including articles about Congress, the White House, the Supreme Court, health professional associations and federal agencies. She has 35 years of experience in health policy. To follow

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