Soaring Drug Prices Lead to Pharma Industry Finger-Pointing

The good news is that the issue of rising drug prices, once ignored by the pharmaceutical industry and Congress alike, is finally gaining recognition as a serious problem. The bad news is that some pharma stakeholders are blaming other stakeholders, igniting what The New York Times calls a “civil war” among the most powerful players in the pharmaceutical industry, including the brand-name and generic drug makers, pharmacists, and pharmacy benefit managers (PBMs). The result, as the Times reported on May 29, 2017, is that lobbyists are crowding congressional offices and assigning blame for rising costs to others, especially to PBMs like CVS Health and Express Scripts, which manage the drug benefits of millions of Americans.

The pharma industry spends nearly twice as much as other US business sectors on congressional lobbying, and that amount has increased after President Trump’s January 2017 accusation that the drug industry was “getting away with murder.” Despite having made this charge, however, President Trump has not presented any proposal of his own to curb drug price increases. His intentions are hard to read, as he has talked about reducing regulations even as he accused the industry of price fixing, and he named industry-friendly former Congressman Tom Price, MD, the head of HHS, and named former pharma consultant, Scott Gottlieb, MD, FDA Commissioner.

Although consumer rage has kept the issue of drug prices in the spotlight—as have well-publicized stories about suddenly skyrocketing costs for EpiPens for severe allergic reactions and about the filing of a lawsuit accusing 3 big insulin producers of price collusion—members of Congress continue to meet with and accept millions of dollars in campaign contributions from industry lobbyists. According to the Center for Responsive Politics, the pharma and health products industry spent $78 million on lobbying in the first quarter of 2017 alone, a 14% increase over such spending in 2016. The industry pays 1100 lobbyists—more than 2 lobbyists per member of Congress—and spent over $58 million on the 2016 election cycle, an expenditure that not only represented the biggest investment in the industry’s history but also a 20% increase over spending on the previous presidential election cycle.

The brand-name drug industry is the biggest player; it spends the most on campaign contributions and has the greatest number of lobbyists. Big pharma’s trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), increased its annual dues by 50% in order to generate an additional $100 million to fund advertising across social media, television, and print media, which in part serves to remind consumers of the industry’s life-saving drugs. Other PhRMA ads pin the blame for drug price increases on PBMs and health insurance companies.

PBMs are launching their own counteroffensive. PBM trade group, the Pharmaceutical Care Management Association (PCMA), has a strategy to engage senior Trump administration officials and build “a firewall” on Capitol Hill, form a partnership with conservative advocacy groups, and run an advertising campaign. PCMA hosted hundreds of government and industry officials at a policy forum in Washington, DC, to explain how PBMs were positioned to save consumers money. A recent press release from Express Scripts, one of the biggest PBMs, shifted the blame for the rising prices of oncology drugs to other factors, saying that spending on oncology medications had increased nearly 22% due to growth in both utilization and unit cost. “List prices for oral oncology drugs, which are not rebated or discounted to any significant extent, have doubled between 2011 and 2016, from $20 per unit to $40 per unit. Looking at the 39 medications on the market in 2010, 6 had 100% to 200% inflation rates, 1 had inflation greater than 300%, and 1 had inflation greater than 800%,” the statement said. A smaller war is playing out between PBMs and pharmacists, according to the same Times report, with lobbyists championing both sides through meetings and e-blasts.

The Times calls the response from members of Congress a “grab-bag” of options that would each help or hurt different industry players. For example, a current bipartisan bill would force brand-name drug makers to provide samples of their drugs to generic competitors, while another bill would allow the import of low-cost medications from Canada. Further, legislation introduced by Doug Collins (R-GA) would force PBMs to increase drug pricing transparency.

The Times reports that industry lobbyists continue to host weekly events for members of Congress at private clubs and restaurants, helping to finance their reelection bids. An example was a PhRMA Industry Breakfast for Representative John Shimkus (R-IL), who in 2016 persuaded the Obama administration to stop a project intended to test ways to lower the cost of Medicare Part B drugs—a program pharmaceutical companies did not want to see implemented. Shimkus, who received nearly $300,000 in drug industry contributions in the last election cycle, led the challenge against the project. Shimkus said that his intention was to protect cancer patients, not the pharmaceutical industry, because a clinic in his district might have closed had the Medicare program gone into effect.

Members of Congress pushing to increase competition and reduce drug prices say that campaign fundraising by pharma lobbyists creates an uphill fight. Representative Lloyd Doggett (D-TX), who has been working on legislation to address drug pricing, said that the civil war in the pharma industry was a positive sign because the attention of Congress is at last focused on a problem about which so many of his constituents already know: price gouging.