The first-ever round of drug price negotiations are underway between the U.S. government and the massive drug companies behind 10 of the costliest drugs covered by Medicare. The companies have until March 2 to respond to the first pricing offers put forward by the Centers for Medicare & Medicaid Services (CMS) on the 10 selected drugs, which do not have a generic or biosimilar equivalents and have been available for at least seven years, among other criteria.
The historic back-and-forth with Medicare over the pricing of blockbuster drugs is something the pharmaceutical industry spent big to try and block from happening. The industry spent a record amount on federal lobbying in 2022, while it focused on stopping the drug price negotiations in the Inflation Reduction Act (IRA), or on shaping the policy after it became law. Last summer, the industry’s largest lobbying organization, PhRMA, sued the government to halt the drug price negotiations, arguing the program is unconstitutional, a case that was dismissed last month. Another lawsuit brought by AstraZeneca, claiming the program was unlawfully implemented, was rejected today when a federal judge ruled the company did not have standing.
In addition to its lobbying activity and legal challenges, PhRMA funds a host of health care groups that lob public challenges against the drug pricing negotiations—many of which don’t disclose their hefty funding share coming from the drugmakers’ lobbying giant. In 2022, PhRMA donated $16.1 million to groups that challenged the Medicare drug price negotiations, according to an analysis by the nonprofit watchdog group Accountable.US. For several of the advocacy groups that have been echoing Big Pharma’s talking points, the vast majority of their funding in 2022, the most recent year covered in tax records, was doled out by PhRMA.
“Big PhRMA spent millions trying to stop Medicare from negotiating lower prescription drug costs for seniors, and they’ll spend millions more trying to ban it,” said Tony Carrk, executive director of Accountable.US. “Drug company CEOs will do anything to keep the system rigged in their favor, even becoming the entire funding stream for extreme right-wing groups who defend price-gouging of patients in need. Motivated by greed, PhRMA’s push to ban Medicare’s new price negotiation power is a direct threat to the health security and pocketbooks of millions of Americans who will benefit from the Biden administration’s historic action.”
Funding coalitions and advocacy groups that bill themselves as “grass-roots” is just one branch of PhRMA’s influence spending to prevent Medicare from negotiating over prices of widely-used drugs. PhRMA alone mentioned the Democrats’ legislation on drug pricing reforms in more than $105 million in federal lobbying spending since the start of 2020, according to Accountable’s review of Senate disclosures.
In January, just as CMS negotiations over the 10 selected drugs were getting started, drug companies raised the prices on 910 brand-name treatments, research firm 46Brooklyn Research found. High drug prices remain a problem for many American consumers: an August tracking poll by health policy organization KFF found that 28% of adults say they have trouble affording the high cost of their prescription medicine. For these initial 10 Medicare-covered treatments, a recent study by the Commonwealth Fund found, the U.S. retail price is, on average, three times higher than it is in other high-income countries.
