Sep 19, 2022

What Comes Next After Major Step Forward on Drug Pricing

Real Clear Health
Lauren Aronson
September 19, 2022

With the passage of the Inflation Reduction Act of 2022, Congress and the Biden administration took a major step toward holding Big Pharma accountable and delivered a significant victory for millions of Americans facing out-of-control drug prices.

This legislation reflects several Campaign for Sustainable Rx Pricing (CSRxP) priorities that previously won bipartisan support, including keeping Big Pharma’s price hikes below the rate of inflation, capping out-of-pocket drug costs for seniors, and ensuring manufacturers pay a portion of the cost when Medicare Part D beneficiaries reach the catastrophic phase of coverage.

These solutions represent major progress toward lowering drug prices for Americans facing financial uncertainty affording their medications. Brand name drug companies’ price hikes outpacing inflation, for example, impose substantial costs on patients and taxpayers. An analysis from the Kaiser Family Foundation found Big Pharma hiked prices faster than the rate of inflation on 23 of the top 25 most popular medications in the Medicare Part D program in 2020. This included all three drugs that accounted for the highest gross spend in the Part D program, Eliquis, Revlimid and Xarelto.

Capping seniors’ out-of-pocket costs will help deliver relief for some of the nation’s most vulnerable patients. A report from the U.S. Department of Health and Human Services (HHS) found more than five million Medicare beneficiaries struggled to afford their prescription medications – with Black and Latino beneficiaries 1.5 to two times more likely to face financial difficulty affording prescription drugs.

These two drug pricing solutions are the most popular components of the entire Inflation Reduction Act of 2022 with U.S. voters. A survey conducted by Morning Consult and POLITICO found 76 percent of voters supported keeping pharmaceutical companies’ price increases below the rate of inflation and 72 percent supported limiting Medicare beneficiaries’ out-of-pocket costs.

Washington finally delivered this significant positive progress on long overdue promises to lower drug prices despite intense opposition from Big Pharma.

The pharmaceutical industry spent more than $285 million unsuccessfully opposing these drug pricing solutions with false and hyperbolic rhetoric while continuing to engage in egregious pricing practices.

While investing hundreds of millions attempting to intimidate lawmakers, blame others in the supply chain and evade accountability, Big Pharma hiked prices on more than 100 brand name drugs in July and nearly 800 drugs in January.

The passage of these drug pricing solutions, despite the pharmaceutical industry’s massive spending to derail the package, sent a clear message: Big Pharma companies can no longer price-gouge the American people without facing accountability.

Going forward, the administration and Members of Congress, on both sides of the aisle, can build on this positive progress with additional market-based solutions to hold Big Pharma accountable and deliver competition, choice, and lower costs for consumers.

Lawmakers should build on bipartisan work to crack down on Big Pharma’s abuse of the patent system. Big Pharma has a long history of price gouging American patients through patent abuse schemes, like patent thicketing and product hopping designed to hinder generic and biosimilar competition and maintain monopolies over drug companies’ biggest money makers.

These tactics impose an unsustainable burden on patients and taxpayers. A study from Avik Roy and Gregg Girvan of the Foundation for Research on Equal Opportunity (FREOPP) found Big Pharma’s patent abuse on biologic drugs alone will cost patients an additional $25 billion by 2029.

An investigation from the U.S. House Committee on Oversight, found delayed alternatives to just one blockbuster drug, AbbVie’s Humira, will cost the U.S. health care system an estimated $19 billion by 2023. Patent gaming around another brand name drug, Imbruvica, will cost the U.S. health care system $41 billion, according to an analysis from I-MAK.

Legislation authored by U.S. Senators John Cornyn (R-TX) and Richard Blumenthal (D-CT) would help crack down on this rampant abuse of the patent system — and passed out of the U.S. Senate Committee on the Judiciary with strong bipartisan support.

Another bill, introduced by Senators Dick Durbin (D-IL), Thom Tillis (R-NC) and Chuck Grassley (R-IA), which seeks to improve coordination between the U.S. Patent and Trademark Office (USPTO) and the Food and Drug Administration (FDA), similarly passed out of the Judiciary Committee with support from both sides of the aisle. This would build on positive steps already taken by the administration to improve FDA and USPTO coordination to crack down on Big Pharma’s patent abuse.

Policymakers should continue to work in a spirit of bipartisan collaboration to advance these, and additional solutions, to crack down on Big Pharma’s anti-competitive practices.

Another key area for attention will be Big Pharma’s increasingly outrageous prices on new products. A recent Reuters analysis found launch prices are on pace for record highs in 2022. This is after Big Pharma companies hiked launch prices by 20 percent every year for 14 years, according to a study published in The Journal of the American Medical Association (JAMA).

Drug pricing advocates, policymakers and the public must also be alert for an angry counter-offensive from Big Pharma, since the pharmaceutical industry is unaccustomed to facing accountability for its egregious behavior.

Policymakers should reject the likely escalation of Big Pharma’s repeatedly debunked blame game targeting others in the supply chain – or attempts to reverse the drug pricing solutions passed as part of the reconciliation bill.

Washington has finally taken a major step forward on longstanding progress to hold Big Pharma accountable. As a result of this victory, there will be even greater opportunities to deliver for American patients that are counting on their leaders to lower prescription drug prices going forward.

Lauren Aronson is the executive director of The Campaign for Sustainable Rx Pricing (CSRxP).

Read the full op-ed here.