Big Pharma and GOP Allies Aim to Sabotage Medicare Drug Price Reforms

The pharmaceutical industry and its Republican allies in Congress are openly signaling their plans obstruct at every turn as the Biden administration looks to begin implementing a recently passed law that will allow Medicare to negotiate drug prices for the first time in its history.

In November, Sen. Marco Rubio (R-Fla.) and several other Republican senators introduced legislation that would repeal the new prescription drug pricing reforms, which Congress approved earlier this year as part of the Inflation Reduction Act—a measure that Republicans unanimously opposed.

"Though chances of this repeal effort succeeding are vanishingly slim with Democrats holding the Senate and White House, conservative lawmakers and their outside allies want to impede the law's progress before its expansion becomes inevitable," Politico reported Thursday.

Big Pharma lobbied aggressively against the Medicare drug pricing provisions, hysterically claiming the modest and extremely popular changes could send the U.S. "back into the dark ages of biomedical research."

Speaking to Politico, Rubio echoed the pharmaceutical industry's talking points.

"I want drug prices to be lower but we have to do it in a way that doesn't undermine the creation of new drugs," Rubio said. "Companies are not going to invest in developing new treatments unless they believe they have a chance to make back their money with a profit."

While the drug price reforms are far less ambitious than what progressives wanted—and the specific provision requiring Medicare to negotiate prices for a small number of drugs doesn't take full effect until 2026—the changes could still have a significant impact on costs, given that a small number of medicines make up a sizeable chunk of Medicare's prescription drug spending.

Beginning next year, the law will also require drug companies to pay Medicare a rebate if they raise their drug prices at a faster rate than inflation. Additionally, the law will limit monthly insulin cost-sharing to $35 for people with Medicare Part D starting in 2023.

Politico noted Thursday that the deep-pocketed drug industry—which boasts nearly three registered lobbyists for every member of Congress—is "gearing up to fight the law's implementation, using whatever legal and regulatory tools are available."

Sarah Ryan, a spokesperson for Pharmaceutical Research and Manufacturers of America (PhRMA), told the outlet that the industry will "keep working to mitigate the law's harm and continue to push for real solutions that will bring financial relief for patients."'

NPRreported in September that pharma lobbyists are likely to take aim at "seemingly technical details" that "could have major implications" for the law, which advocates and Democratic lawmakers hope to build on in the coming years.

According to NPR:

One area ripe for gaming is the formula known as average manufacturer price that Medicaid uses to determine whether companies owe money for hiking prices faster than inflation. The law gives companies ample discretion in how they calculate that average, and firms have used that discretion to include or exclude certain sales to avoid triggering rebate payments. Just one loophole in that formula, which Congress closed in 2019, had cost Medicaid at least $595 million per year in lost rebates.
The Inflation Reduction Act essentially duplicates the language of Medicaid's inflation rebate law, making Medicare now vulnerable to the same loopholes.

Rep. Peter Welch (D-Vt.), who is set to be sworn in as a senator next month, told Politico that "it's going to be really hard to reverse" the drug price reforms once they take effect and begin having a material impact.

"If [negotiation] works in Medicare, it can work in the private market," said Welch, who cautioned that the drug industry is still a strong influence that must be overcome.

“All the contributions they make and all their lobbying money gives them a lot of power," Welch said. "But I think what gives them the most power is that everybody can imagine themselves in a position where someday, somebody they really love is going to need a pharmaceutical drug and won't be able to get it. They play on the fear we all have by basically saying, 'If you make us charge reasonable prices, that'll happen.'"

Welch stressed that he views such fearmongering as "bogus."

Patient advocates have similarly decried the pharmaceutical industry's scare tactics, which are often used to shield companies' power to drive up prices as they please.

"Patients like me and those who live with hemophilia need innovative medicine. But what use is there in developing groundbreaking new drugs if we can’t afford them?" Utah-based advocate Meg Jackson-Drage wrote in a letter to Deseret News earlier this month. "The drug price provisions in the Inflation Reduction Act aren't a political 'sound bite'—they are historic legislation that allow for the innovation we need at prices we can afford."

"Patients fought hard for the reforms in the Inflation Reduction Act—and we won't let Big Pharma and its allies' fearmongering scare us," Jackson-Drage added.

Politico reported Thursday that "Senate Finance Chair Ron Wyden (D-Ore.) said his committee will be on the lookout for any political or corporate meddling" with regard to the drug price reforms.

Sen. Bernie Sanders (I-Vt.), who is set to take charge of the Senate's Health, Education, Labor, and Pensions Committee, has vowed to use his position to challenge the "incredible greed in the pharmaceutical industry."

One Democratic pharmaceutical lobbyist lamented anonymously to The Washington Post last month that Sanders will "go after [the drug companies] at every turn, and they only have a couple friends left in the caucus anymore, so it's going to be tough."