US pharma fights back against Biden campaign to cut prices

“We’ve been fighting big pharma for a long, long time,” US president Joe Biden said last week as he announced a key step in a signature initiative to reduce pharmaceutical costs for Americans.

The president clearly believes people in the United States have been paying far too much for their medication. But the power of the pharmaceutical industry in Washington as well as opposition from Republican politicians was too great to overcome.

Eventually last year, with its landmark Inflation Reduction Act, Biden and his Democratic Party had the votes to “beat big pharma”. They are now expected to proclaim this victory as they campaign in advance of congressional and presidential elections in November next year.

The pharmaceutical industry is fighting back, however. Leading companies including Bristol-Myers Squibb, Merck and Johnson & Johnson as well as some industry representative groups have initiated court challenges.

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Republican politicians are also vigorously opposed to the president’s initiative. They argue it represents government price setting and will undermine innovation, leading to a reversal of decades of progress in the provision of life-saving treatments.

There are political dangers for the president. Cutbacks in investment by the pharmaceutical industry could impact on another significant administration project – the ‘cancer moon shot’ aimed at reducing the death rate by at least half over 25 years.

The legal challenges could also work their way up to the conservative majority in the US supreme court which has already rejected other administration initiatives.

Biden is standing firm. He said the court challenges came after pharmaceutical industry had spent $400 million (€373 million) in its unsuccessful lobbying effort in Washington to block the legislation to allow the federal government to lower drug prices.

“We’re going to see this through. We’re going to keep standing up to big pharma, and we’re not going to back down.”

He argued that Americans paid “more for prescription drugs than any other big economy in the world”.

“You can walk in a local drugstore across the country; you’re paying two to three times more for the exact same prescription manufactured by the exact same company than it would cost you in Canada or France or anywhere else around the world.”

The president maintained that lowering prescription drug costs formed part of his overall economic vision.

Several months ago he launched a plan to reduce the cost of insulin to $35 a month for older Americans – a significant development for many who were paying multiples of that amount. However, the big initiative was to give the government powers to negotiate lower prices for drugs purchased by Medicare, the federal health insurance programme for people aged 65 and over.

Last week, Biden announced a list of 10 best-selling drugs which will have to undergo tough price negotiations for the first time, including drugs for heart failure, blood clots, diabetes and arthritis. The administration plans to add more medications to the list next year.

The proposed reforms are aimed at generating a minimum reduction of 25 per cent on the list price of a drug. Manufacturers who do not take part in the new negotiations face significant financial penalties.

In an opinion article in the Wall Street, Bristol-Myers Squibb chairman and chief executive Journal Giovanni Caforio wrote: “The law will end up discouraging the development of oral drugs that help millions of elderly patients in the US. That’s because the Inflation Reduction Act arbitrarily offers less protection to ‘small molecule’ medicines, including those taken in a pill or capsule, than to ‘large molecule’ injected or infused medicines, thus penalising the development of treatments that are more convenient for patients.”