The White House and key Democrats and Republicans turned up the heat again on Big PhRMA on Tuesday, lashing out at soaring prescription prices and vowing to press for measures to lower Medicare’s staggering drug costs and encourage greater competition among drug manufacturers.
After weeks of uncertainty over President Donald Trump’s commitment to lifting a legislative ban on Medicare negotiating lower drug prices with major pharmaceutical companies -- as does Medicaid, the Veterans Administration, and other government health care agencies -- White House spokesman Sean Spicer said yesterday, “He’s for it, yes.”
“The easier way to look at this is to look at what other countries have done: Negotiating costs to keep those down,” Spicer said during a White House press briefing. He said the mounting costs of health care and prescription drugs are a “huge burden” on seniors in the Medicare program and must be addressed.
Trump has sent mixed signals on whether he would support direct government intervention to lower health care costs, even as he has repeatedly complained about “astronomical” and unjustifiable surges in drug prices. Spicer’s comments temporarily drove down biotech stock prices and rekindled industry speculation over whether the new administration would come down hard on drug manufacturers.
Yesterday evening, Sen. Bernie Sanders (I-VT), one of the most liberal members of Congress, and arch-conservative Sen. Ted Cruz of Texas, seemingly joined forces during the town hall meeting to denounce the drug industry’s pricing practices and agreed to support two major initiatives: to lift the prohibition on Medicare bargaining for lower prices and to authorize consumers and drug distributors to acquire cheaper drugs from Canada and other countries.
Sanders, who promoted these and other ideas for reining in drug prices during his unsuccessful campaign for the Democratic presidential nomination, delivered a scathing critique of the highly profitable drug industry and its top executives. He also took to task Senate and House members who over the years did nothing to address the drug price crisis.
“Just as the case with healthcare, we pay the highest prices in the world for prescription drugs,” Sanders said. “What’s going on is that the pharmaceutical industry owns the United States Congress. I would admit it’s not just Republicans. They have a huge influence over the Democratic party as well.”
“So right now, the reality is that uniquely in the whole world, you can walk in tomorrow to your pharmacy, and the cost that you pay is double or triple [what it is elsewhere], and there is nothing that anybody can do about it,” he said.
Pharmaceutical companies have been among the biggest political spenders for years. They've traditionally supported Republican candidates, as they have received 64 percent of industry contributions on average since the 1990 election cycle, according to the Center for Responsive Politics, a watchdog research organization. Until now, drug lobbyists led by PhRMA have succeeded in blocking measures that threatened to cost them billions of dollars of annual profits.
Cruz, who differs sharply with Sanders over GOP efforts to repeal and replace the Affordable Care Act, said the two are in agreement on measures for increasing price competition and opening the borders to the importation of less expensive drugs. However, he voiced strong support that the Food and Drug Administration speed up the agency’s review of new drug applications – especially drugs for the treatment of seriously ill adults and children.
“I would love for us to work together going after big PhRMA, and in particular taking on the FDA,” Cruz told Sanders. “Right now it takes $2 billion to approve a new drug. . . There is story after story after story of life-saving drugs that are available, that are approved, they are used in Europe, they are used in Canada, and the FDA won’t allow it.”
Prescription drug prices have risen at a double-digit rate in recent years and are projected to continue to rise at that clip this year. In some cases, pharmaceutical companies have jacked up their prices by as much as 1,000 percent to 5,000 percent for some life-saving drugs. Medicare, which covers 55 million Americans, spends $1 of every $6 on prescription drugs, or an estimated $95.1 billion in 2016, according to the Kaiser Family Foundation.
Less than two weeks into his administration, Trump on Jan. 21 summoned the heads of a half-dozen top drug manufacturers to the White House for the first round of talks after complaining that the pharmaceutical industry was “getting away with murder” by gouging consumers and the government.
“We have to get the prices way down,” Trump told the CEOs of Merck, Amgen, Eli Lilly, Novartis and Johnson & Johnson, as well as the head of the Pharmaceutical Research and Manufacturers of America, the top trade group. "We have to get prices down for a lot of reasons. We have no choice, for Medicare and Medicaid, we have to get prices way down.”
Trump had offered a number of measures for containing drug prices, including the importation of cheaper drugs and allowing Medicare to begin negotiating drug prices. At the behest of drug manufacturers, Congress included the Medicare non-negotiation ban in the 2003 Medicare Part D drug legislation. That prohibition provided major pharmaceutical companies with billions of dollars in windfall profits.
PhRMA and its long-time allies on Capitol Hill have fought for years to preserve that ban on negotiating drug prices for the national health care program for seniors and opening the borders to cheaper drugs from abroad. They are digging in again to block efforts to repeal the restrictions.
“Broadly, both of these proposals are concerning given the consequences for patients, both Medicare beneficiaries and consumers generally, said Allyson Funk, a spokesperson for PhRMA.
Funk insisted in an email that “It is a common myth that there is no negotiation in Medicare Part D,” the prescription drug program for seniors. She said that “large, powerful purchasers” like Express Scripts have negotiated deep discounts and rebates directly with drug manufacturers, bypassing the Department of Health and Human Services and “saving money for both beneficiaries and taxpayers.
She also said that the Congressional Budget Office (CBO) has said on multiple occasions that the secretary of health and human services would not be able to negotiate lower prices than exist now “without restricting access to medicine for beneficiaries.”
As for the drive to allow the importation of less expensive drugs from Canada and other countries, Funk said the importation of unapproved and potentially counterfeit medicine, “jeopardizes the secure medicine system in the United States and presents a serious risk to public health.”
PhRMA did not directly respond to Sanders’ claim that the powerful lobbying group with deep pockets has effectively co-opted congressional Republicans and Democrats in the past to block unwanted legislation. But experts on campaign spending and lobbying say there is no question PhRMA wields a big stick.
“The pharmaceutical industry is indisputably one of the most powerful lobbies in Washington,” said Sheila Krumholz, the executive director of the center. “It spent tens of millions on campaign donations and hundreds of millions on lobbying last cycle, which helped open doors on Capitol Hill for their army of 1,400 lobbyists. All that money is a pittance compared with the industry profits it helped produce, but means consumers shoulder higher costs than they would otherwise.”