Pharmaceutical Industry Attempts to Intimidate Lawmakers and Keep Prices High by Re-Upping False Claims, Blame Game and Discredited Innovation Rhetoric

On Thursday, the Pharmaceutical Research and Manufacturers of America (PhRMA) sent a letter from the organization’s board of directors in a last-minute bid to intimidate lawmakers into voting against drug pricing solutions included in the Inflation Reduction Act of 2022.

The letter rehashes a laundry list of the industry’s favorite, and repeatedly debunked, arguments. Below, we look at claims in the letter and set the record straight.

PhRMA’s Claim: “This bill will not provide relief for families struggling with inflation or help the average American patient afford their medicines.”

The Truth: Big Pharma’s latest messaging gimmick, the subject of a recent ad campaign, is to claim out-of-control prescription drug prices are not fueling inflation. The facts are clear however, Big Pharma’s price hikes have consistently outpaced inflation and caused rising costs for consumers.

The facts are also clear on the positive benefits of key drug pricing solutions included in the Inflation Reduction Act for American patients and taxpayers. For example, the nonpartisan Congressional Budget Office (CBO) estimates policy to keep Big Pharma’s price hikes below the rate of inflation will save taxpayers $100.7 billion over 10 years and help disincentivize rampant price-gouging of American patients. In reviewing a previous iteration of this policy, CBO also said it could have a positive impact on lowering drug prices in the commercial market.

In addition, the $2,000 out-of-pocket cap in the bill is estimated to impact 1.4 million Medicare Part D beneficiaries.

PhRMA’s Claim: “While the bill saves the federal government $300 billion, it takes far more from the biopharmaceutical industry and will have significant consequences for innovation and patients’ hope for the future. Some economists estimate upwards of 100 new treatments may be sacrificed over the next two decades if this bill becomes law.”

The Truth: For far too long Big Pharma has used the excuse that research and development (R&D) costs justify out-of-control prescription drug prices and that solutions to lower prices threaten innovation into new breakthroughs. These tired arguments, which Big Pharma wields like a shield to protect the industry’s anti-competitive and price-hiking practices, simply don’t hold up to scrutiny.

Multiple studies have found Big Pharma’s price hikes have little to no connection to the cost of its development or improvements in drugs’ efficacy. In other words, brand name drug companies set launch prices and hike prices to maximize profits — not because there is any connection to innovation.

In addition, contrary to the industry’s insistence that out-of-control prices support costly investments in R&D, the facts shows that brand name drug companies invest more boldly in advertising, profits and overhead than innovation and R&D.

And while Big Pharma tries to obfuscate their out-of-control list prices by invoking “innovation,” the industry has gotten a huge boost in recent years from taxpayer dollars in the form of taxpayer-funded research at the National Institute of Health (NIH).

Little surprise, PhRMA also utilized data from a researcher with long-established financial ties to the pharmaceutical industry to claim new medications could be threatened by drug pricing solutions in the Inflation Reduction Act.

The researchers cited by PhRMA, is Precision Health Economics. “About 75 percent of publications by [Precision Health Economics] employees in the past three years have either been funded by the pharmaceutical industry or have been done in collaboration with drug companies,” according to reporting from ProPublica.

“Critics have at times questioned the assumptions underlying the consultants’ economic models, such as the choice of patient populations, and suggested that some of their findings tilt toward their industry clients,” the ProPublica report. “For example, some have tried and failed to reproduce their results justifying the value of cancer treatments.”

PhRMA’s Claim: “Changes that would have a more immediate, meaningful impact at the pharmacy are missing from the bill…it further delays a policy – the rebate rule – that would immediately lower costs for millions of seniors at the pharmacy counter.”

The Truth: PhRMA is employing one of the industry’s favorite tactics whenever they face solutions that would hold Big Pharma accountable on Capitol Hill – the blame game. The Rebate Rule is a key policy component of Big Pharma’s blame game strategy of dodging accountability for the industry’s egregious pricing practices and pointing a finger at others in the supply chain.

The Rebate Rule, if implemented, would do nothing to lower prescription drug prices, would hike health care premiums on America’s seniors, would cost taxpayers $200 billion and could even increase out-of-pocket costs.

Here are the facts on the Rebate Rule:

The rule would do nothing to lower out-of-control prescription drug prices:

It would increase premiums for Medicare Part D beneficiaries:

It could even increase Part D beneficiaries’ out-of-pocket costs:

Its implementation would cost taxpayers at least $200 billion in increased spending:

And it would hand the pharmaceutical industry a more than $130 billion bailout in boosted revenues:

PhRMA’s Claim: “This lack of real affordability gains is reason enough to vote against this bill. But so is the assault on innovation.”

The Truth: PhRMA and its allies claim drug pricing solutions are tantamount to an “assault on innovation” but, in addition to the points made above, a series of reports from the U.S. House Committee on Oversight and Reform found that Big Pharma’s price hikes and pricing practices were tied to executive compensation benchmarks and earnings targets, and had little if nothing to do with clinical improvements.

Lawmakers should reject Big Pharma’s debunked and hyperbolic rhetoric and deliver on longstanding promises to hold the pharmaceutical industry accountable to lower prescription drug prices for the American people.

Read more on why Big Pharma’s claim that lowering prescription drug costs will undercut innovation is bogus HERE.

Read more on why Big Pharma’s latest round of advertising opposing drug pricing solutions doesn’t hold up to scrutiny HERE.

Read about Big Pharma’s most recent major round of price hikes, including more than 100 increases on brand name drugs in the first week of July 2022 HERE.

Learn more about solutions to hold Big Pharma accountable and lower prescription drug prices HERE.

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