Latest News | Jun 7, 2024

This Week in Drug Pricing: Pharma V. Facts and Americans Concerned Over High Drugs Prices

Welcome to the Week in Review.

Pharma V. Facts

At this year’s American Society of Clinical Oncology conference, drug industry executives and their allies continued to peddle misinformation about the Inflation Reduction Act, claiming the law will stifle investment in small-molecule drugs. However, their fear-mongering doesn’t align with the facts. In the nine months following the law’s passage, major pharmaceutical companies have shown an increased appetite for acquiring small-molecule drugs. Eli Lilly’s $2.4 billion purchase of DICE Therapeutics, a biotech company with a promising small-molecule drug in Phase II clinical trials, and Bristol Myers Squibb’s $4.8 billion acquisition of Mirati Therapeutics with its small-molecule cancer drug Krazati, demonstrate the enduring attractiveness and profitability of these therapeutic approaches. In fact, analysts have projected a significant increase in global spending on small-molecule drugs from $76 billion in 2022 to about $152 billion in 2031. Venture capital firms have similarly expressed confidence in the value proposition of small molecules, which have accounted for more than 75 percent of all new drugs since 2010. Despite warnings at the conference from industry leaders like Eli Lilly CEO David Ricks and the Pharmaceutical Research and Manufacturers of America (PhRMA) CEO Stephen Ubl about the law’s supposed “negative implications” for innovation, Medicare’s long-overdue authority to negotiate fair drug prices promises massive cost savings for patients and taxpayers, without diminishing incentives for continued investment in medical breakthroughs. — (Fierce Pharma, Brookings InstituteEndpoints, Fierce Pharma, STAT, NIH, CAP, NPR

Americans Concerned Over High Drug Prices

A new national poll by West Health-Gallup confirms the harsh reality faced by millions of Americans: soaring drug prices. Thirty-one percent of Americans, who pay more than four times for the same brand name drugs compared to residents of other wealthy nations, are concerned about their ability to afford their medications over the next 12 months – a significant jump from 25 percent in 2022. Among adults 65 and older, the increase is even more substantial, up 11 percentage points to 31 percent from 20 percent. “The medications are very, very expensive. I’m a diabetic and a lot of the medications that I’m taking are like a hundred and something [dollars],” shared Emily G., a Texas patient highlighted in the survey report. These findings come as public opinion of the pharmaceutical industry continues plummeting. A shocking 83 percent of Americans believe profits are the primary driver of high drug prices, with the industry’s approval rating a dismal 18 percent.

As public anxiety mounts, so too is the pressure on policymakers to confront Big Pharma’s profiteering head-on. While the Inflation Reduction Act was a monumental step toward lowering drug prices for millions of patients on Medicare, urgent legislative action is needed to increase competition to lower prices for more Americans. Congress has the opportunity to advance bipartisan legislation that would close loopholes and rein in Big Pharma’s patent abuses to increase savings for patients. P4ADNOW’s David Mitchell testified last month before the Senate Judiciary Committee about the urgent need for these critical reforms to ensure patients can access the medications they need at prices they can afford.  — (Gallup, RAND, P4ADNOW, Forbes)   

Welcome to the Week in Review.

The Financial Burden of Cancer Medications

Common cancer treatments hit the market with exorbitant list prices that typically increase faster than the rate of inflation – placing a severe financial strain on patients. Between 2019 and 2023 55 percent of new cancer drugs were launched with a price exceeding $200,000 annually and nearly 60 percent of working-age cancer survivors report facing some financial difficulty due to costs associated with their disease. This forces many patients to cut back on essentials like groceries, skip mortgage payments, and incur massive debt to afford their medication. Gwendolyn, a grandmother living with cervical cancer, shared with the Wall Street Journal how her expensive treatment left her unable to afford basic necessities like toothpaste or toilet paper. The financial burden has been particularly heavy for cancer patients on Medicare, who have often paid a percentage of these high list prices out-of-pocket, which can add up to thousands of dollars. However, the new $2,000 yearly cap on out-of-pocket costs, set to take effect in 2025 under the Inflation Reduction Act, will drastically reduce costs for people who get a brand-name cancer drug through Medicare Part D. P4AD’s Cancer Report, estimates an average saving of $7,590 annually and up to $19,296 in some cases. While the drug price law marks significant progress to lower out-of-pocket costs, continued legislative action is needed to curb drug companies’ ability to set excessively high launch prices for new cancer treatments and other conditions. — (ReutersKFFThe Wall Street JournalIQVIAP4AD

Patent Abuse Drives Up Costs For Young Patients

The exorbitant prices of brand-name drugs in the United States are due in part to the anti-competitive tactics used by pharmaceutical companies to extend their monopoly pricing power and obstruct cheaper generics and biosimilars from entering the market. Drug prices in the U.S. are three to eight times higher than in other comparable nations, and with approximately 53 percent of young adults in the U.S. living with a chronic condition, the financial burden is extended over a lifetime. Sneha Dave, the executive director of Generation Patient, told Think Global Health that the decisions young people with chronic conditions make “are very much centered around our ability to afford medications into the future.” Comprehensive patent reform to close these loopholes is crucial to inject true competition and provide relief for young people who will spend their lives not only managing their conditions but dealing with the financial burden of paying for their medications. P4ADNOW is continuing to push for the passage of bipartisan legislation to curb anti-competitive practices and increase competition, ultimately lowering drug prices for all patients. — (Fierce PharmaCommonwealth FundCDCThink Global HealthP4ADNOW)

Price Watch!

Starting tomorrow, June 1st, out-of-pocket costs for inhaler products manufactured by AstraZeneca and Boehringer Ingelheim will be capped at $35 a month, thanks to pressure from advocates and lawmakers. GlaxoSmithKline’s $35 monthly out-of-pocket cap on inhalers will take effect on January 1, 2025, while Teva, the last of the four major inhaler companies, has not yet chosen to follow suit and reduce costs for patients.

Welcome to the Week in Review.

1. Continued push for competition
On Tuesday, the Senate Judiciary Committee held a hearing on the anti-competitive tactics used by the pharmaceutical industry to block generic and biosimilar competition in order to keep drug prices high. P4ADNOW’s founder and cancer patient David Mitchell, testified before the committee in support of bipartisan bills currently in Congress that would address these patent abuses, including pay-for-delay deals, product hopping, and patent thickets. Committee members from both parties expressed outrage over drug makers’ persistent manipulation of the patent system at the expense of patients. Chairman Durbin condemned big pharmaceutical companies’ “skilled lawyers manipulating the patent system” to delay affordable competition, and Senator Cornyn highlighted the 165 patents on Humira as clear “abuse” of the system that resulted in AbbVie’s prolonged monopoly pricing power. The reforms are urgently needed to restore fairness to our patent system, increase competition, and provide relief to patients and taxpayers. — (AxiosYoutubeWOKVMedPage TodayP4ADNOWSenate Judiciary CommitteeNBC News)

2. Facts V. Pharma Fearmongering
AstraZeneca’s new goal to reach $80 billion in revenue by 2030 — a 75 percent increase over 2023 — by aiming to launch 20 new medicines, undermines industry claims that the Inflation Reduction Act will stifle drug innovation. The company’s CEO Pascal Soriot even recently admitted that the impact of the drug price law is “completely manageable” yet the company is simultaneously pursuing an aggressive lawsuit to dismantle Medicare negotiation — one of the most popular and transformational provisions in the historic legislation. Major pharmaceutical companies like AstraZeneca are projecting robust growth and a flourishing pipeline of new medicines in the years to come, and drugmakers are continuing to thrive and invest in research, demonstrating that innovation can coexist with policies aimed at providing much-needed pricing relief to patients. — (The GuardianCNBCFierce PharmaReutersGeorgetown UniversitySTAT)   

2. Launch Prices for New Diabetes Drugs Create Access Barriers
Big Pharma’s high launch prices for diabetes and weight loss drugs like Ozempic and Trulicity are creating significant access barriers. A KFF poll revealed that about 54 percent of adults who had taken a GLP-1 drug found them “difficult” to afford, with high prices disproportionately harming people from historically underserved communities. Patients are being forced to ration or forgo their essential medicines, exacerbating health conditions and leading to devastating but preventable consequences such as kidney failure and blindness. We must address launch prices to balance the need for fair profits while ensuring accessibility and affordability. — (KFFKFFFox 5)

PhRMA Lobbying: The Pharmaceutical Research and Manufacturers of America (PhRMA) spent $9.4 million on federal lobbying in the first quarter of 2024. This heavy spending underscores the industry’s determination to protect its power to set prices despite ongoing efforts from patients and allies.

Patients For Affordable Drugs NOW Founder and Cancer Patient David Mitchell Testifies Before Senate Judiciary Committee On Need For Patent Reforms To Lower Drug Prices
Calls For Closing Loopholes Exploited By Drug Companies, Restoring Patent System’s Intent To Spur Innovation Not To Block Competition

WASHINGTON, D.C. — David Mitchell, founder of Patients For Affordable Drugs NOW and a patient with a rare incurable cancer, will testify at 10 AM today before the United States Senate Judiciary Committee about the anticompetitive tactics used by pharmaceutical companies to extend drug monopolies and keep prices high for patients in the United States. Watch the testimony for the “Ensuring Affordable & Accessible Medications: Examining Competition in the Prescription Drug Market” hearing.

Mitchell will emphasize the urgent need for bipartisan reforms that strike the right balance between ensuring patents reward true innovation while facilitating timely competition to make prescription drugs affordable for people whose lives depend on them.

In his testimony submitted to the committee, Mitchell highlighted how pharmaceutical companies manipulate the patent system to extend their monopolies and block lower-cost generic and biosimilar competition from entering the market, rather than incentivizing genuine innovation as the laws intend. He pointed to strategies like product hopping, patent thicketing, pay-for-delay deals, and misuse of the Food and Drug Administration (FDA) citizen petitions as prime examples of Big Pharma’s tactics that reduce competition and keep prices higher for longer. Mitchell voiced strong support for a package of bipartisan bills in the Senate that rein in these abuses and close loopholes that drugmakers exploit at the expense of patients. By tackling anticompetitive practices, the reforms would realign incentives to spur innovation while better facilitating timely market entry to drive down prices consistent with the will of Congress.

As someone battling an incurable blood cancer, Mitchell knows firsthand the importance of innovation for developing new, life-extending treatments. “I care deeply about innovation and new drug development. My life depends on it. Without innovation, I will die sooner than I hope to,” he shared in his testimony. “That is not a plea for sympathy – it’s just an unfortunate fact.”

His testimony also highlighted the stories of other patients struggling with high drug costs, such as Judy from Maine who was initially skeptical but relieved when her Enbrel copay went from over $2,000 to $0 thanks to the Inflation Reduction Act, and Samantha from West Virginia who has been in recovery for 10 years but has to pay $800 for a 90-day supply of Suboxone for opioid addiction treatment. His testimony also shared that Beatel from Minnesota saw the price for 40mg of cholesterol drug Tricor skyrocket to $1,800 per month after joining Medicare at 65 but found the pharmacist could provide the same 80mg dose using 160mg tablets for just $40 since that larger dose was off-patent. And lastly, John from Baltimore, who is also battling multiple myeloma, pays $990 per pill for the cancer drug Revlimid that his insurer refuses to cover, leaving him feeling “hijacked” and at the mercy of the manufacturer’s assistance program – a situation he says is “scarier than the disease itself.”

Key highlights from the testimony include:

You can find the full written testimony linked HERE

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Patients for Affordable Drugs NOW, is the only national, bipartisan patient advocacy organization focused exclusively on policies to lower drug prices. We empower and mobilize patients and allies, hold accountable those in power, and fight to shape and achieve system-changing policies that make prescription drugs affordable for all people in the United States. P4ADNOW does not accept funding from organizations that profit from the development or distribution of prescription drugs. To learn more visit PatientsForAffordableDrugsNOW.org

Click here for a downloadable PDF with citations

Testimony of David E. Mitchell Founder, Patients For Affordable Drugs NOW before the  U.S. Senate Committee on the Judiciary for a hearing on “Ensuring Affordable & Accessible Medications: Examining Competition in the Prescription Drug Market”

May 21, 2024

Chairman Durbin, Ranking Member Graham, members of the committee. Thank you for inviting me to testify today at this important hearing examining how we can lower prescription drug prices by curbing the rampant anticompetitive conduct in prescription drug markets that is hurting patients, consumers, and taxpayers across America. 

Section I. Background and Introduction

My name is David Mitchell. I am the founder of Patients For Affordable Drugs NOW. We are the only national patient advocacy organization focused exclusively on policies to lower prescription drug prices. We are independent, bipartisan and we don’t accept funding from any organizations that profit from the development or distribution of prescription drugs.

Since we launched a little over seven years ago, more than 35,000 patients across all 50 states have shared stories with us of their struggles to pay high drug prices. And we have built a community of more than three-quarters of a million patients and allies supporting policies to lower drug prices.

More importantly for today, I have an incurable blood cancer, and prescription drugs are keeping me alive — literally. 

My oncologists currently have me on a four-drug combination of infused and oral cancer medications. These four drugs carry a combined list price of more than $1 million per year. Just one of my oral drugs, called Pomalyst, is priced at more than $22,400 for 21 capsules, which I must buy every 28 days. And because Medicare beneficiaries like me pay our out-of-pocket costs based on list price, I spent more than $16,500 out-of-pocket last year — just for Pomalyst. To help manage the cost of my infused drugs, I spend another $3,980 per year to purchase a Part B supplement. And of course, I have the base costs of Medicare to pay as well. 

But the Inflation Reduction Act has changed that equation completely. After paying more than $16,000 last year because there was no out-of-pocket maximum in Part D, I am paying only $3,326 this year as an out-of-pocket cap began to phase in. Next year, the maximum anyone on Medicare will pay annually for drugs is $2,000. Our patients who have been unfortunate enough to contract a disease or condition requiring expensive drugs are elated–they say it is life-changing. Judy from Maine wrote to us a few weeks ago saying:

“I have to admit that I was still a bit skeptical about the Medicare changes until today. In January my copay for Enbrel was $2,150.83. In February it was $1,141.86. Today it was zero. I was thrilled, as was the staff at the pharmacy.”

That’s just one story. There are many more like that.

Here on this slide is the state of my disease today. This slide below is from a presentation to the FDA’s Oncologic Drugs Advisory Committee on March 15 of this year on the state of multiple myeloma in the U.S. Please note the last point.

The last point is always sobering to reflect on: “Despite this improvement, most patients with a diagnosis of myeloma will die from the diagnosis.” Yet, I am a very lucky man — the drugs are currently keeping my cancer at bay, and I tolerate them pretty well. But with multiple myeloma, nothing works forever. This is why innovation is so important to me. And it goes to the heart of the reason for this hearing:

We rely on patents to incentivize and reward innovation. We give drug companies limited-time monopolies to charge whatever they like in order to ensure a rich reward for the development of innovative new drugs. We need that innovation. I need it personally. But drugs don’t work if people can’t afford them. And too often drug companies abuse the current patent system, not to reward innovation, but to block competition that would lower prices as the patent laws intend. The bipartisan bills that are the focus of today’s hearing aim to address that abuse and restore the intended balance.

For me personally, the point is: I need innovative new drugs. I care deeply about innovation and new drug development. My life depends on it. Without innovation, I will die sooner than I hope to. That is not a plea for sympathy–it’s just an unfortunate fact. 

But my more than 13-year journey as a cancer patient has taught me that our current system which relies on competition and market forces to lower drug prices after a period of monopoly pricing is not working. I’m here to ask each of you to fix it.

Section II. The High Prices Americans Pay For Drugs and Need For Further Reforms 

Drugs are too expensive in the United States. Americans pay more than four times what people in other wealthy nations pay for the exact same brand-name drugs. Even after applying estimated rebates to arrive at net prices, Americans are still paying more than three times what people in other wealthy nations pay for the same brand-name drugs.

Consequently, about three in ten Americans report having difficulty affording their medications. When their prescription drug prices are too high, Americans face challenges affording other expenses, such as food and housing. One survey found that over 20 percent of people took on debt or declared bankruptcy because of their medications.

High drug prices disproportionately harm communities of color. One in two Latinos in the United States takes a prescription medication, and more than 20 percent are uninsured. Black and Latino adults aged 65 and older were more likely to report difficulty affording prescription medications than White adults. Further, Black Americans are more likely to live with chronic pain, diabetes, and high blood pressure than white Americans and are nearly two times more likely to be uninsured. 

As expensive as my drugs are, even with Medicare out-of-pocket caps taking effect, I never lose sight of the fact that roughly 26 million Americans don’t have any health insurance at all and are exposed to the full list price of the medications they need. 

The reality is that people struggle to pay these high prices with and without insurance.

Americans have been demanding relief for years. A KFF poll in July of 2023 found three out of four Americans said there is not enough government intervention when it comes to limiting the price of prescription drugs. That includes 82 percent of Democrats, 67 percent of Independents, and 68 percent of Republicans. In the wake of the enactment of the Inflation Reduction Act which is helping millions of people by lowering prices and making drugs more affordable–Americans want more done. 

Section III. The Need for Patent Reform

When a drug company makes a truly innovative discovery, it should be rewarded with a patent and receive a fair return for the risk and investment it undertook. Our patent system was created to facilitate these rewards for innovation so that drug companies are incentivized to pursue true clinical breakthroughs and inventions that bring meaningful benefits to patients. 

But the drug industry would have you believe that every patent is deserved and that the sheer volume of patents granted is an appropriate indicator of innovative achievements. That couldn’t be further from the truth. 

Neither new patents nor new drugs equal new innovation. Worse, in too many cases, manufacturers are abusing America’s patent and exclusivity system –not to reward innovation – but to prevent free-market competition and block affordable generic and biosimilar drugs from coming to market.

Between 2005 and 2015, 74 percent of the new drug patents issued were for drugs already on the market. A second study of the ten top-selling drugs in 2021 corroborated that number. Of the roughly 100 best-selling drugs in another study, nearly 80 percent obtained an additional patent to extend their monopoly period.

In fact, gaming of the patent system to extend monopolies beyond the time intended under law inhibits true innovation patients like me need. If big drug companies can block competition and raise prices on old drugs at will in order to drive profits and executive bonuses, they have far less incentive to take risks by investing in research and development (R&D) to develop innovative new drugs that could command high prices and save lives.

There are a variety of strategies used by drug corporations to extend monopolies, including product hopping, evergreening, patent thicketing, pay-for-delay deals, and abuse of the U.S. Food and Drug Administration (FDA)’s citizen petition process.

These tactics lead to longer exclusivity than our laws intend. The median length of post-approval market exclusivity for small-molecule drugs in one study was not five years or even the seven years allowed for orphan drugs. Instead, it was 12.4 years. 

Product Hopping

Let’s start with product hopping. This tactic occurs when a brand-name company switches a patient population from an older product whose patent is coming to an end and facing imminent competition to a different formulation that has a later expiring patent and therefore, is not facing competition. The “new” drug typically offers little or no new clinical benefit, it may even be as simple as changing a product from a tablet to a capsule.

This switching takes two forms. In “hard” switches, the brand-name company removes the older product from the market, forcing patients onto the new version. With “soft” switches, the company keeps the older product on the market, but engages in aggressive marketing to prescribers and patients, urging them to switch to the newer formulation. By switching their market to a “new drug,” brand-name companies effectively eliminate the market for new generics that rely on automatic substitution state laws to gain traction in the patient populations.

As patients, we support product evolution that improves effectiveness or reduces toxicities of a drug. I take a drug that causes painful peripheral neuropathy—loss of feeling in my feet. If a reformulated drug were to reduce this type of side effect, it might well meet an appropriate standard for an innovative change meriting a patent extension. 

Unfortunately, this is often not the case for patients. Two drugs that have been involved in high-profile product hopping cases are Suboxone and Tricor, which treat opioid dependence and high cholesterol respectively. Here’s what patients have told us about both:

Samantha from West Virginia writes:

“I have been in recovery for over ten years now. The cost of Suboxone is outrageous — especially since, from the time I began taking it until now, the price is still as high or higher. It’s ridiculous! It’s easier for people to misuse narcotics (the cost is less). The cost for Suboxone is about $800 [for a 90-day supply].”

Beatel from Minnesota told us:

“When I changed to Medicare at 65, my price for 40mg of Tricor went to $1,800/month. The pharmacist whispered to me, ‘If the doctor changed the order to 160 mg tabs and I broke it in half for the 80 mg dose, it would cost me $40.’ The drug company still had the patent on the 40mg tab. The patent for the 160mg tab had expired…same drug.”

Patent Thickets

Patent thicketing is a tactic similarly designed to undermine market competition at the expense of patients. This strategy occurs when drug companies file dozens of non-innovative patents in order to create an impenetrable “thicket” around a drug product forcing a prospective generic or biosimilar competitor to litigate through each of the patents in order to gain market entry. 

Let’s look at another drug I take to prevent blood clots and stroke–Eliquis. In 2021, it was the most expensive drug for Medicare at $12.6 billion. Its maker-Bristol Myers Squibb (BMS) has applied for 48 patents and been granted 27, blocking competition in this country for 40 years. The list price for a 30-day supply in the U.S. is about $600. The cost in Canada–where there is a generic on the market–is less than $75.

The encouraging news is that there are multiple bills before the Senate designed to close loopholes in our patent system that are harming patients. All have bipartisan support. Many have already cleared this committee on strong bipartisan votes.

● P4ADNOW supports S. 150, the “Affordable Prescriptions for Patients Act of 2023,” which cracks down on patent thickets in the biologic market and is projected to save hundreds of millions of dollars. There is also a new bipartisan bill-S. 3583-which has not cleared committee and we support that bill as well.

● S. 150 also addresses product hopping. When combined with the legislation’s patent thicket provisions, the bill could save $1 billion.

● Pay-for-delay continues to be a problem, despite the Actavis decision. This tactic occurs when brand-name drug companies provide something of value to a potential competitor to induce them to delay selling a generic version of a drug, therefore keeping it off the market in order for the brand-name drug to maintain a monopoly for longer. P4ADNOW has endorsed S. 142, a bipartisan bill to curb pay-for-delay agreements that the nonpartisan Congressional Budget Office (CBO) estimates could save $600 million.

● The citizen petition process at the FDA was designed so that patients could raise safety concerns about drug approvals. But research has revealed that the citizen petition process has been co-opted by corporations looking to block competition. Brand-name drug makers were behind 92 percent of all citizen petitions filed between 2011 and 2015. But they were not raising legitimate safety concerns, which is why the FDA threw out nine of every 10 of the industry’s “sham” petitions, which were without scientific merit and filed for the sole purpose of delaying generic competition, keeping prices high for patients. P4ADNOW supports both S. 148 and S. 1067 which will reform this process, promote generic competition, and save millions of dollars.

● Current FDA policies prohibit the agency from disclosing information generic companies need in order to speed approval of new generic competitors. P4ADNOW supports S. 775 which will increase transparency and facilitate generic entry. This bill is projected to save more than $800 million.

● P4ADNOW also supports S. 79 which will establish a task force between the United States Patent and Trademark Office (USPTO) and FDA in order to improve communication in the implementation of each agency’s patent-related activities.

To achieve true innovation at prices that are affordable over the long haul, we must reform our patent and exclusivity system so that it is once again focused on driving innovation that saves lives, not driving high prices that make lifesaving drugs unaffordable to those whose lives depend on them. 

Section IV. What Else Should We Do? Reform Pharmacy Benefit Managers (PBMs)

While the headwaters of our drug pricing problems are the list prices set by drug corporations, there are other reforms needed downstream in the supply chain. Pharmacy benefit managers (PBMs) are black boxes that cut secret, mutually beneficial rebate deals with manufacturers, and none of it is transparent. We need to increase transparency and curb anticompetitive practices by PBMs.

It is simply wrong that patients like me don’t know if the preferred drug on a PBM formulary is there because it is the best drug, because it is the least expensive drug among equally effective options, or because the PBM got a big, legal kickback from the manufacturer. Without transparency, it is impossible to know how much of a rebate is going to the PBM, to the insurer, to lower my premiums, or to reduce my out-of-pocket costs at the pharmacy counter. With the Big Three PBMs–Cigna, Optum Rx, and CVS Health–in control of 80 percent of the $633 billion in U.S. spending on drugs, that is more than half a trillion dollars flowing through just those three entities annually., And vertical integration uniting all three major PBMs with insurers only increases their market power. Opaque practices with that kind of money involved are a bad way to run a railroad. It’s time for transparency to ensure PBMs are operating in the best interests of patients and consumers.

It’s not just about transparency either. Drug companies and PBMs also enter into rebate arrangements that are designed to thwart lower-cost competition. These are commonly called “rebate walls,” defined as:

“Exclusionary contracting practices that a drug manufacturer deploys to limit the ability of rivals from gaining preferred access to the formulary, or any access at all. Branded manufacturers leverage their position as market leaders by offering financial incentives to pharmacy benefit managers and health insurers in the form of ‘all or nothing’ conditional volume-based rebates, in exchange for virtually exclusive positioning on the formulary. …If the payer does not accept the rebate agreement for a particular indication, it may lose all rebates for its product on all covered indications.” 

Let’s be clear: These rebate deals are designed to benefit both the manufacturer seeking to block competition and the PBM that gets a bigger rebate. These deals are not designed to help patients like me by lowering prices or increasing patient choice. They are emblematic of our drug pricing system which has been built to benefit those who profit from it at the expense of those it is supposed to serve. 

P4ADNOW supports reforming the practices of PBMs, including transparency requirements in order to determine how rebates are actually working — how much is going to reduce premiums and out-of-pocket for patients and consumers and how much is going to increase profits for the PBMs or insurer plan managers. In our ideal world, PBMs would have a fiduciary responsibility to patients and all beneficiaries, and all reforms would put patients at the center. While none of the PBM bills go as far as we would like, each takes important steps in the right direction and would make meaningful and important progress in the regulation and oversight of PBMs. We support key provisions of bills that have cleared the Finance Committee on unanimous or near-unanimous bipartisan votes:

The House Energy and Commerce Committee has also advanced legislation addressing PBM practices. We support provisions in the Lower Cost, More Transparency Act, H.R. 5378, that improve transparency and reporting requirements. We were also pleased to see the House Ways and Means Committee include reform delinking PBM compensation from prices in legislation it advanced earlier this month – H.R. 8261, the “Preserving Telehealth, Hospital, and Ambulance Access Act. In our view, however, none of the provisions in House legislation go far enough in reforming PBMs and ensuring they are putting patients and consumers first. 

We are also following closely and supporting the Federal Trade Commission (FTC) investigation into PBMs as well. We look forward to the first interim report on that investigation expected this summer. We hope Congress uses the report to inform future legislation, and that Congress gives strong backing for the FTC to take action it may recommend.

Section V. The Inflation Reduction Act Strikes A Balance To Ensure Innovation We Need At Prices We Can Better Afford 

It’s important to note that the Inflation Reduction Act (IRA) is built to strike a balance to ensure the innovation we need at prices we can better afford. In the run-up to the enactment of the IRA, the drug industry kept telling us that the legislation would stifle investment and kill innovation and access to new drugs. No one cares more about innovation than patients. But if you pull back the curtain on this pharma fear-mongering and look at what has actually happened since the IRA enactment, the argument doesn’t hold up. Here are eight reasons why.

The industry has plenty of money for innovation. In the wake of the Inflation Reduction Act passage, investors are upbeat. Drug company stocks are doing fine. The industry is flush with cash and has great access to capital.  

According to the Congressional Budget Office (CBO), despite Big Pharma’s claims that the implementation of the Inflation Reduction Act would stifle innovation and significantly impact profit margins, there has been a consistent and continuous increase in venture capital investment in pharmaceutical companies, demonstrating stability and resilience within this sector as shown in Figure 1. 

Figure 1.

Drug companies remain by far and away the most profitable sector of the healthcare industry–more than tripling the profit of Pharmacy Benefit Managers (PBMs) and insurers.

Figure 2.

Since the passage of the Inflation Reduction Act:

The Inflation Reduction Act incentivizes innovation by curbing drug companies’ ability to drive profits by raising prices on old drugs at will. 

The Congressional Budget Office (CBO) says the Inflation Reduction Act will have a minimal to non-existent impact on new drug development.

Figure 3.

Taxpayers are the source of early high-risk, basic science that drives innovation — not industry.

Lower drug prices help people access existing, innovative drugs they need right now, but can’t afford. 

Finally, Big Pharma consistently threatens that patients will lose access to newly developed drugs. It notes that more drugs are available — and are available faster — in the United States than in other wealthy countries. Pharma frequently cites a white paper from the White House Council of Economic Advisers (CEA) to explain why: “Drug manufacturers usually pursue market access in the United States before other markets due to the higher prices in the United States.” The CEA could also have mentioned the other big reason drug companies file for approval first in the United States: It is the largest market in the world., After the IRA is fully implemented our country will still offer the highest prices by far in the largest market in the world, preserving the incentive to file first for approval in the United States.

There are other important policies in the U.S. drug pricing system that lead to more drugs being available here compared to other countries, none of which are altered by lowering prices under the IRA:

Medicaid must cover every drug offered by a manufacturer in the United States if the manufacturer agrees to give Medicaid a best-price guarantee.

The pharmaceutical industry’s threats to innovation and access don’t hold up. The IRA restores balance to move us in the direction of fair prices and profits while still getting the innovation we need. 

Section VI: Conclusion

Let’s be clear: Big Pharma is not fighting for the interest of patients or because lowering its prices a bit will cripple innovation. It’s fighting to restore and maintain its complete economic power over the American people to dictate prices of brand-name drugs–a power it has in no other nation on the planet. The head of the powerful trade association, PhRMA, affirmed that fact in a moment of candor when he said in an interview a couple of years ago that his industry is “particularly adept at … rolling the tanks, if you will, to push back against policy proposals adverse to the industry’s interests.” The industry’s multiple lawsuits to block Medicare negotiation that will touch only about four percent of its global revenue is further evidence this struggle is about keeping the U.S. market as the one place in the world where it can dictate prices at the expense of people’s lives and livelihoods.

Of course, drug companies want to disguise that truth. Instead, they blame others and never offer policy solutions that involve lowering their prices. They seek to distract attention from their central role in making drugs unaffordable in America today.

And they try to scare us by saying that if we don’t bend to their will, we won’t get the drugs we need for the future. They pose questions like: How much would you pay to save a life?

And that’s easy. When it’s you or someone you love, the answer is anything. You’ll empty your bank account, mortgage your home, cash out your 401k. You’ll do whatever you have to do.

But that’s the wrong question. We should be asking: How do we strike and maintain a balance to ensure we get the innovation we need at prices we can afford? 

While we at Patients For Affordable Drugs NOW would have gone further in the Inflation Reduction Act, it clearly was built with the goal of striking that balance as a foundational principle. That point is driven home by a fact that is worthy of repeating: The IRA does not change the key way our nation rewards investment and risk-taking for innovation–we continue to allow drug companies to set launch prices and maintain those prices for a minimum of nine to 13 years before potentially facing negotiated prices.

This story from John in Baltimore captures so well the challenges patients face and the need to lower drug prices. Like me, he has multiple myeloma and must take very expensive drugs. He says: “I’m on a tightrope that is scarier than the disease itself. I did everything to protect myself and my family from financial disaster, but I feel as though after everything I’ve been hijacked by a drug company. I have no other options and they want to keep it that way.”

I feel incredibly grateful to spend my retirement fighting so John can feel secure in his retirement, and not be held hostage by a drug company. I ask that you help John and millions of other Americans by moving forward with bipartisan patent and PBM reforms to make our system work better for the people it is supposed to serve. 

Thank you.

Welcome to the Week in Review.

1. Bearing The Cost Of Gene Therapies
A major milestone was reached earlier this month as 12-year-old Kendric from Washington, D.C. became the first patient living with sickle cell to begin a Food and Drug Administration (FDA) approved gene therapy with the potential to cure his disease. Sickle cell disease is a lifelong blood condition that affects 100,000 people in the United States and 20 million people worldwide — most of whom are Black and Brown. However, the newly approved sickle cell gene therapies, Lyfgenia and Casgevy, are currently priced at $3.1 million and $2.2 million per patient respectively. Such exorbitant launch prices will create unsustainable budget pressures for governments, insurers, and employers — and most critically will limit patient access to these treatments. While gene and cell therapies have the potential to transform medicine and patients’ lives, potentially offering cures for previously intractable diseases like sickle cell, and leukemia or lymphoma, there is an urgent need to find sustainable pricing models. These models must strike a balance between incentivizing innovation and improving access and affordability, because everyone deserves access to the medicines they need at prices they can afford. — (The New York TimesPress-TelegramX)

2. Public Awareness Of Relief From The Inflation Reduction Act Grows
KFF poll released this week highlights the growing awareness among older voters of the drug pricing provisions in the Inflation Reduction Act — which enjoys support from 71 percent of all voters. Between November 2023 and May 2024, the share of voters ages 65 or older who knew about Medicare’s authority to negotiate drug prices increased from 36 to 48 percent, those aware of the $35 monthly insulin copay cap increased from 45 to 52 percent, and those familiar with the $2,000 cap on out-of-pocket costs went up from 27 to 40 percent. Notably, a majority of voters across the political spectrum support extending certain provisions of the monumental drug price law to all adult patients with insurance, as well as increasing the number of drugs subject to Medicare negotiation. However, the reality remains that only 45 percent of Americans have heard about the drug price reforms in the Inflation Reduction Act, underscoring the ongoing need to ensure patients are not only aware of the benefits of the drug price provisions, but are able to access them. — (KFFThe Washington PostNavigator ResearchKFF)

P4ADNOW ON THE HILL: On Tuesday, May 21st at 10 a.m. P4ADNOW’s founder and cancer patient David Mitchell will testify before the Senate Judiciary Committee at a hearing titled “Ensuring Affordable & Accessible Medications: Examining Competition in the Prescription Drug Market.” In his testimony, David will highlight how drug companies use anti-competitive tactics and abuse loopholes in the patent system to prolong their monopolies on drugs, blocking competition and keeping prices high for patients. 

WATCH: Major drug companies have launched aggressive lawsuits seeking to dismantle the new Medicare negotiation program and regain their complete pricing power. P4AD’s Merith Basey joined RJ Eskow on “The Zero Hour” to talk about Big Pharma’s legal assault and the recent rulings in favor of patients. 

Welcome to the Week in Review.
 

1.  Drug Companies Game The Patent System
As blockbuster drugs approach patent expiration, major pharmaceutical companies are deploying manipulative tactics to extend their monopoly pricing power and delay or prevent lower-cost competition. In 2023, the cancer drug Keytruda was the top seller with $23 billion in sales, in 2028 the manufacturer Merck is set to lose a key patent on the drug which would allow biosimilar alternatives into the market and reduce the corporation’s revenues. Merck is not alone in exploiting the patent system. AbbVie, the maker of best-selling Humira, notoriously constructed a “thicket” of more than 160 patents around the drug, delaying affordable biosimilar alternatives for decades and forcing patients to bear exorbitant prices. While the drug companies stop at nothing to maximize their profit margins, even at the expense of patients, P4ADNOW is working to advance bipartisan legislation to curb these anti-competitive practices and secure lower drug prices for all Americans. — (Quartz, The New York Times, P4ADNOW)

2. Big Pharma’s Actions Belie R&D Claims
In the first quarter of 2024, the ten drugs selected for Medicare negotiation brought in $16.5 billion in revenue, contributing to $25.4 billion in combined profits for the drug manufacturers. An Accountable.US report revealed this week that in 2023, the eight drug companies that manufacture these 10 drugs collectively spent $95.9 billion on research and development (R&D), while also shelling out $162 billion, almost twice as much, for stock buybacks, dividends, and marketing and administrative costs and nearly $500 million on executive compensation. The findings expose the continued hypocrisy of the pharmaceutical corporations that are challenging the Medicare negotiation program in court. While claiming that lower negotiated drug prices will severely impact their ability to innovate and invest in new drugs, these companies dedicated a disproportionate amount of their resources for payments to executives and shareholders and have plenty of capital to spare to invest in new R&D. — (Protect Our CareAccountable.USThe Hill
 

BONUS: According to a national poll conducted by the University of Michigan, 54 percent of adults over the age of 50 said they were “very concerned” about the cost of prescription drugs. While the drug price reforms in the Inflation Reduction are already lowering drug costs for millions of patients on Medicare there are more victories to be won that will lower drug prices for everyone in the US.

Welcome to the Week in Review.
 

1. Pharma Faces Setback in Legal Battles To Stop Medicare Negotiation
Big Pharma’s bid to obstruct the implementation of the Medicare Negotiation program suffered a significant setback on Monday as a federal judge ruled against Bristol Myers Squibb and Janssen Pharmaceuticals in their lawsuits challenging the constitutionality of the program – marking the fourth time a judge has ruled against the drug industry and in favor of patients. “There is no doubt that this ruling is a win for patients. It eviscerates the strongest arguments in Big Pharma’s coordinated multi-million dollar attack on Medicare negotiation,” shared P4AD’s Merith Basey following the decision. Since the ruling, both drug companies have indicated that they will appeal the ruling, despite the judge’s unequivocal rejection of their central arguments. On the same day, AstraZeneca filed a separate notice to appeal a judge’s March decision rejecting the corporation’s lawsuit challenging the program. On Wednesday, the Pharmaceutical Research and Manufacturers of America (PhRMA), alongside the Global Colon Cancer Association and the National Infusion Center Association (NICA), presented oral arguments in their appeal in Texas. Currently the scoreboard reads patients: 4, Big Pharma: 0. — (ReutersPatients For Affordable DrugsFierce PharmaPatients For Affordable DrugsCNN

2. Drug Price Reforms Enjoy Broad Support Despite Low Awareness
A Navigator Research poll released this week revealed robust bipartisan support for the drug price reforms in the Inflation Reduction Act, with 71 percent of voters backing the historic law. Across the political spectrum, a majority of voters strongly support key provisions benefiting patients on Medicare: 87 percent support capping insulin out-of-pocket costs at $35 a month, 83 percent support penalizing drug companies that raise prices faster than the rate of inflation, and 74 percent support the $2,000 cap on out-of-pocket costs taking effect next year. Despite widespread support, less than a third of respondents report awareness about these reforms, highlighting the need for broader education efforts. In a Washington Post column this week, Leana S. Wen, a professor at George Washington University, outlined the key provisions of the drug price law and emphasized the urgent need they seek to address: one in five older adults forgo their prescriptions due to cost. — (Navigator ResearchThe Washington Post)

3. The Looming Cost of Inhalers 
GlaxoSmithKline (GSK) is facing criticism over its decision to discontinue its popular Flovent asthma inhaler, one of the most commonly prescribed inhalers for children, and replace it with a costly generic inhaler not covered by many insurers — forcing thousands of families to pay its full list price ranging from $150 to $250 per month. Given that asthma is more common and often more severe for Black, Latino, and low-income children, it is these families who are disproportionately harmed when already high inhaler prices increase. Exploiting loopholes in the patent system, these companies routinely withdraw effective treatments from the market and force patients to transition to newer, more expensive versions. This deceptive practice of “product hopping” is one of the drug industry’s favorite tactics. Fortunately, several bipartisan bills in Congress, supported by P4ADNOW, are poised to address such tactics and bring down costs for patients. — (The Washington PostCNNUS News)

BONUS: New data released by the Department of Health and Human Services (HHS) showed that more than 10 million people on Medicare received a free vaccine in 2023 thanks to the Inflation Reduction Act, a significant increase from 2021 when just 3.4 million people received a vaccine covered under Medicare. 

Patients for Affordable Drugs NOW, the C4 arm of P4AD, is the only national, bipartisan patient advocacy organization focused exclusively on policies to lower drug prices. We help educate and mobilize patients in support of legislation to fix our broken system. P4ADNOW does not accept funding from organizations that profit from the development and distribution of drugs.