The Intense Battle Over U.S. Drug Pricing and PBMs

An intense battle is rumbling along in the courts and in the United States Congress and it’s all about drug pricing. The pharmaceutical industry enjoys considerable flexibility in drug prices for the U.S. Because of this, branded, patent-protected drugs are five times more expensive in the U.S. than in other nations with advanced economies. Change is coming, though, with Medicare price negotiations set to begin later this year. Those negotiations will start slow with a list of ten targeted drugs to be announced on September 1.

But the drug industry has a very different view. From the industry perspective, change is hurtling at it. This change will put investment in medical research at risk and damage public health. Vas Narasimhan is president of the industry’s lobbying group, PhRMA. He told the Financial Times this week:

“Every day we’re making pipeline decisions based on the current legislative language and what that’s doing is leading to companies . . . deprioritizing pills for the elderly, which is not going to be the right thing in the long run for public health,”

Suing to Prevent Medicare Price Negotiations

So the industry is suing to stop the pricing pressure from these price negotiations. Four drug companies have filed their own lawsuits – Astellas,  Bristol Myers Squibb, Johnson & Johnson, Merck. These lawsuits are additional to suits filed by PhRMA and by the U.S. Chamber of Commerce. The speculation is that the array of lawsuits may serve to produce conflicting rulings and put the question in front of a very business-friendly Supreme Court. Georgetown law professor Lawrence Gostin told the New York Times:

“The Supreme Court is openly hostile to any perceived violation of the Fifth Amendment. It would not surprise me at all to see these cases go up to the Supreme Court and have them strike it down.”

In short, the industry is throwing everything it can at this perceived threat to their business model for profitable medical innovation. The NYT aptly describes it as a kitchen-sink strategy.

Pointing the Finger at PBMs

Another track in this policy battle targets a different industry – pharmacy benefit managers or PBMs. These are the middlemen who nominally are responsible for negotiating drug prices for health insurance plans, but who also have a reputation for driving prices up so that they can get a slice of a bigger pie in the end.

So the Senate Finance Committee is hard at work on bills to regulate this industry in an effort to put more downward pressure on drug prices and out-of-pocket costs. And thus the industry is setting new records for its spending to lobby Congress and block any regulation.

The pharmaceutical industry is happy to have the spotlight on someone else. To encourage this, PhRMA is running a PR campaign that points the finger at PBMs.

Obesity Meds for the Few and the Wealthy

Will this battle royale over drug pricing mean better access to obesity medicines? Maybe someday. But right now, we’re stuck with obesity meds for the few and the wealthy. Many drug plans exclude them and those who rely on Medicare to pay for their medicines are totally out of luck. Medicare drug plans exclude them altogether, because the law to create those plans was written in a time when it was A-OK to act like obesity is simply the fault of the person who has it – not a complex, multifactorial disease.

Maybe, just maybe, the prospect for reform of this obsolete thinking is improving. The TROA is up for consideration in Congress again and more people are asking how it makes sense to keep excluding these important medicines from Medicare.

Limiting access to obesity care – whether through inflated prices or obsolete policies – merely drives up the burden of chronic disease and ultimately, healthcare costs.

Click here, here, here, and here for further perspective on this battle over drug costs and pricing.

Battle in the Heavens, painting by Nicholas Roerich / WikiArt

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July 26, 2023