Back in 2003, when the Medicare prescription drug benefit was enacted into law, the pharmaceutical industry bought a sweetheart deal. The chairman of a key committee, Billy Tauzin, inserted into the bill a prohibition on Medicare negotiating directly with drug companies for lower prices. Shortly thereafter, Tauzin left Congress and went to work for the powerful industry trade association (PhRMA) for a salary of $2 million a year.
For almost 20 years, PhRMA fought successfully to keep that sweetheart deal. Drug companies could dictate the prices of medicines, and the government could not negotiate directly to get a better deal.
That changed last year with passage of the Inflation Reduction Act, which requires Medicare to negotiate for 60 of the most expensive drugs. With 80 percent support from the American people, Democrats in Congress overcame the drug industry’s money and power and put an end to the sweetheart deal.
But the drug corporations and their business associations aren’t having it. They’ve filed six lawsuits to block the new law with one overarching aim: to protect their power to charge Americans three-and-a-half times what other wealthy nations pay for the same brand-name drugs.
There is no free market for prescription drugs in the U.S. Prices are a function of laws and regulations won by drug companies through the years. The current pricing system harms the health and financial well-being of U.S. patients and consumers. More than one-third of Americans say cost has prevented them from filling a prescription. Thirty percent of prescriptions for cancer drugs were not filled. People of color, people with disabilities, the poor and women are hurt most by high drug prices.
We turned a corner last year to end the abuse of Americans by drug companies by passing the new drug law. So will the industry succeed in using lawsuits to thwart the will of the people?
The industry claims the new drug law is unconstitutional. But the arguments brought in their suits have been adjudicated before and failed. For example, other sellers of health care goods and services have in the past challenged government purchasing programs for Medicare and Medicaid. Each time the courts have said such programs do not violate the Constitution “where the regulated group is not required to participate in the regulated industry.” Drug companies can choose not to sell to Medicare and Medicaid. No one is forcing them.
The plain facts are that Medicare sets prices for everything else it pays for in healthcare: doctors, hospitals, and tests, for example. But drug companies say they won’t negotiate and will fight having to do so using every tool at their disposal. They insist they must have the power to set prices for the drugs we buy.
As a patient with incurable blood cancer whose drugs carry a list price of almost $1,000,000 per year, I can tell you it’s wrong. One oral cancer drug I take is a so-called “orphan drug” for small populations which carry prices 1.8 to 4 times what other wealthy nations pay. This drug, Pomalyst, costs just shy of $1,000 per capsule. Eliquis, a blood thinner I must take that is likely to be one of the first drugs negotiated, has a list price of $6,825 per year in the U.S. because its maker, Bristol-Myers Squibb, has blocked competition. In Canada, where there is a generic, the price is $1,680.
Why the lower prices abroad? Because every other developed nation in the world negotiates with drug companies for lower prices. but not us.
Last year, Americans rose up and said it was time for a change. This year, the pharmaceutical industry is saying “no way.” Drug companies claim to put patients first, but their priorities are power and profit. Always.
Drug companies also claim that negotiation leading to lower prices will kill innovation and new drug development. But this red herring doesn’t hold up. In fact, the new drug law will spur innovation because drug companies will not be able to generate huge profits by extending monopolies and raising prices at will on old drugs — they will need to innovate.
What’s more, the negotiating process under law requires that Medicare give central weight to the clinical value of a drug, whether it represents a therapeutic advancement and the extent to which it meets an unmet need. In other words, drug companies will get higher prices for high-quality, innovative drugs. The law maintains the incentives for innovation that already exist in the U.S. by allowing drugmakers to be rewarded for investment and risk by setting their launch prices, maintaining the FDA-awarded period of exclusivity, and exempting all medications from negotiated prices for a 9- to 13-year period.
The Biden administration is defending the law and the will of the people. We will support the legal fight against the pharmaceutical industry, and do all we can to make sure the courts understand how patients will be harmed if the law is delayed or overturned.
David Mitchell is a cancer patient and founder of Patients For Affordable Drugs, the only national, bipartisan patient organization focused solely on policies to lower drug prices.