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Experts Discredit Drug Companies’ Lies About Medicare Negotiation

By September 15, 2023No Comments

Drug Companies Falsely Claim Innovation Will Suffer As Patients in America Cut Pills and Skip Doses to Make Ends Meet

The Biden administration recently announced the first round of high-cost drugs whose prices will come down as Medicare negotiates with the drug companies. The new program, which is overwhelmingly popular with voters from all parties, will lower costs for certain drugs used to treat conditions like cancer, diabetes, heart disease, and autoimmune disorders – which disproportionately impact women, communities of color, and people in rural areas.

However, big drug companies are suing in the courts to try to stop the Inflation Reduction Act’s core provision of giving Medicare the power to negotiate lower drug prices. They have also started a campaign of lies in an attempt to persuade people that allowing Medicare to negotiate lower prices will prevent drug companies from introducing innovative drugs. But innovation isn’t really what the drug companies are worried about – they just want to protect their profits, continue to line their CEOs’ pockets, and take advantage of patients. In reality, giving Medicare the power to negotiate will save seniors and taxpayers billions while rewarding innovative drugs. 

Legal and health care experts are fighting back against the misinformation campaign. Here’s what they have to say:

Cynthia Ho, Director of the Intellectual Property Program at Loyola University of Chicago School of Law, and Liza Vertinsky, Law Professor at the University of Maryland Francis King Carey School of Law, said: “Once a More Nuanced Approach to Innovation Is Considered, the IRA Might Even Increase Innovation in Higher Public Value Drugs.” “We posit that the current lawsuits and other backlash against the IRA are simply the latest examples of what we refer to as “innovation bullying” by the pharmaceutical industry. And we suggest that this innovation bullying has real costs that can and do deter welfare-improving drug regulation and even valuable innovation.” [Health Affairs, 9/11/23]

Ed Silverman, Pharmalot Columnist and Senior Writer at STAT, said: “If the Pharmaceutical Industry Expects the Public to Heed Its Warnings, It Will Have to Do a Better Job of Explaining Why Swaths of Patients May One Day Lose Out on Treatments.” “Beyond complaining about price controls and unconstitutional mandates, the key message aimed at the American public has been that innovation will suffer. This is a familiar but tiring refrain. When policymakers have attempted to address prescription drug costs in the past, the industry has often rattled this sabre, warning any attempt to rein in pricing would boomerang and some therapies will never be developed.” [STAT, 9/7/23]

The Brookings Schaeffer Initiative on Health Policy’s Richard G. Frank and Caitlin Rowley said: “Despite the Pharma Companies’ Fears, Negotiating Medicare Prices Will Not Lead to a ‘Nuclear Winter.’” “However, such forecasts are unfounded. […] Not only are revenues enough to justify the investment in these particular drugs, they are enough to fund several more generations of pharmaceutical development. Lower negotiated prices are unlikely to deter further investment in similar medications.” [Bloomberg Opinion, 9/5/2023]

The Brookings Schaeffer Initiative on Health Policy’s Richard G. Frank and Ro W. Huang said: “To Date, We Have Found Little Evidence Suggesting a Disruption in Activities and Investments That Will Yield New Pharmaceutical Products in the Years to Come.” “When coupled with optimism expressed in recent large drug company earnings reports, the evidence indicates that the investment environment for drug development remains largely unchanged by the IRA’s drug price negotiation program and is currently not threatened by it.” [Brookings Institution, 08/23/23]

Rachel Sachs, Professor of Law at Washington University, and The Brookings Schaeffer Initiative on Health Policy’s Loren Adler and Richard G. Frank said: “IRA Opponents’ Innovation Concerns Are Overstated and Oversimplified, Overlooking Important Dimensions of Innovation for Patients.” “The oversimplified vision of “innovation” and the IRA’s relationship to it presented by many of the law’s detractors simply do not match the nuanced vision of innovation encompassed either in the IRA or in adjacent policies that the Biden Administration has simultaneously pursued. […] Taken together, it is even possible that these combined changes could increase the development of higher-value drugs, and at the same time reducing costs and increasing patient access.” [Health Affairs Scholar, 6/20/23]

Former U.S. Representative Henry A. Waxman, Chairman of Waxman Strategies, said: “Above All, An Innovative Drug Doesn’t Help Anyone If It Is Unaffordable.” “The reality is there is currently no correlation between a drug’s list price and its R&D costs. The price of insulin has skyrocketed by 64 percent since 2014 not because of innovation, but because the drug companies could get away with it. […] The manufacturer AbbVie doubled Humira’s price from about $19,000 per year to $38,000 per year for Americans. But in Europe, the company cut the drug’s price by 80 percent and is still not losing money.” [Health Affairs, 12/10/19]

Michael A. Carrier, Professor of Law at Rutgers University School of Law, and Genevieve Tung, Associate Director for Educational Programs at the Biddle Law Library, said “Drug Companies Play Games.” “Big Pharma has cried Innovation Wolf every time Congress seeks to address its shenanigans. And the legislators keep coming to defend it. That has to stop. It is past time for the industry to be called to account on using its get-out-of-jail-free innovation card to avoid reasonable legislation.” [STAT, 9/26/19]

Larry Levitt, Executive Vice President for Health Policy at KFF, said: “The Issues Raised by Critics Can Be Complex and Nuanced, Involving Trade-Offs Not Always Easily Condensed Into Sound Bites.” “One of the big reasons any effects on innovation may be muted is that drugs are shielded from government negotiation for quite a while: until nine years after Food and Drug Administration approval for small-molecule drugs like pills and 13 years for injectable biological products. Drugmakers can continue to set their own prices and reap substantial profits before having to submit to negotiation.” [New York Times, 9/6/23]