Skyrocketing Prices Fuel Drive for Fresh Crackdown on Drug Costs

Drug pricing advocates fresh off a major win say they’re turning their attention to changes for pharmaceutical industry middlemen and to curbing high launch prices for new medicines.

These changes take aim at areas left out of the sweeping drug pricing legislation (Public Law 117-169) that Democrats passed this summer. Now, advocates say it’s time to address the role of pharmaceutical benefit managers and the growing price of innovative new drugs.

“This is just the beginning,” said Merith Basey, who as of Monday is the new executive director of the nonprofit Patients for Affordable Drugs.

The cost of medicine is rising and recent legislation to rein in what consumers pay for drugs largely takes aim at older medicines, not new ones. This has prompted some lawmakers and advocates to refocus next year on watching launch prices and patent practices.

The median launch price for drugs in the US rose last year to $180,007 for a year’s supply, up from a $2,115 annual cost in 2008, JAMA said in research published in June. Over the same time period, nearly half of drugs — or 47% — became priced at $150,000 a year or more, up from 9% in 2008.

Kerem Yucel/AFP via Getty Images

Alexis Stanley’s packets of insulin sit on the table in 2020 in St. Paul, Minn. High costs have sent Americans across the border to Canada to buy cheaper, lifesaving medicines.

This November could be pivotal for building on enactment of what Democrats tout as one of the farthest-reaching drug pricing bills in American history. The new law caps annual drug costs for people on Medicare, and empowers the government to demand lower prices from drugmakers.

Pharmaceutical groups and conservative organizations have sponsored millions of dollars in ads lambasting the new law. Drugmakers stand to lose billions of dollars each year if the changes are enacted as designed.

Patients for Affordable Drugs, founded five years ago by a public relations executive with an incurable — and costly to treat — blood cancer, is pressing for further reductions in the cost of medicines. Basey, the group’s new leader, says the hardest work remains to be done.

Basey brings a background in increasing access to medicines: She was executive director for Universities Allied for Essential Medicines in North America and helped found the 100 Campaign, which aims to expand access to insulin around the world. In an interview, she said she spent almost 20 years in Ecuador working to make insulin more affordable to people there.

The group’s pivot to focus on carrying out the drug pricing changes enacted this year — as well as revising drug patent laws and rules for pharmaceutical industry middlemen — mirrors the priorities of key members of Congress.

Lawmakers this Congress have tried to advance legislation (S. 1435) targeting what’s known as product hopping, where drugmakers try to move patients off a drug with an expiring patent onto a newer one, and (S. 1428) pay-for-delay, where brand-name drugmakers pay generic competitors not to bring new products to market.

Read More: J&J, Amgen, Regeneron Drugs Likely to Face Medicare Negotiation (1)

Further Changes

Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, told reporters last week he wants to keep trying to extend more of the new drug pricing law to private insurance plans, namely an out-of-pocket cap for insulin.

That bill could include a provision aimed at pharmacy benefit managers, Sen. Jeanne Shaheen (D-N.H.) said. Shaheen and Sen. Susan Collins (R-Maine) want to allow insulin makers to sidestep drug rebates — money drugmakers pay sometimes to PBMs — in exchange for agreeing not to raise the list price of their products.

Basey said her group wants to ensure that rebates go to those who actually buy the drugs to lower their overall costs, instead of to PBMs or other middlemen.

Three companies — CVS Caremark, Express Scripts, and OptumRx — currently make up more than two-thirds of the PBM marketplace.

Senate Majority Leader Chuck Schumer (D-N.Y.) said he plans to hold a vote on an insulin bill this year, but hasn’t specified what legislation will come to the floor.

Senators Press to Extend Cap on Insulin Price in Bill This Month

Basey predicts the drug-pricing law will prove popular and show Congress can pass legislation lowering what consumers pay for medicines — without political blowback.

“This win will only add fuel to the fire that patients can win, and will continue to win,” she said.

Still, Democrats were able to pass drug-pricing legislation this year only after agreeing to forgo government drug-pricing negotiations for newer drugs, something their own members worried could hurt the pharmaceutical industry

Cost to Stay Alive

Patients for Affordable Drugs founder David Mitchell, helped head the Washington, D.C.-based public relations firm GMMB for almost 30 years and remains the public face of the group. He diagnosed with an incurable blood cancer more than a decade ago and has testified before Congress the drugs he takes to stay alive carry a list price of more than $900,000.

The group has proven influential and has connections to the Biden administration, as well as deep-pocketed interests. Ben Wakana, the group’s executive director from 2017 to 2020, is now part of the White House Covid response team.

Tax records show Mitchell and his group raised more than $2 million from the Laura and John Arnold Foundation — Texas billionaires who’ve funded various drug-pricing efforts — to launch a campaign collecting and telling stories of people who pay tens of thousands of dollars each year for lifesaving drugs. The idea has been to take those stories to Congress to make the case for cracking down on the pharmaceutical industry.

The Arnolds’ Action Now Initiative also gave Patients for Affordable Drug’s super political action committee more than $10 million during the 2018 and 2020 election cycles. The group targeted ads at lawmakers it saw as too friendly to the pharmaceutical industry, and supported those who promised to rein in drug prices.

The PAC has been quiet in the 2022 election cycle, though, despite having more than $99,000 cash on hand to start, Federal Election Commission records show.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bgov.com

To contact the editors responsible for this story: Robin Meszoly at rmeszoly@bgov.com; Anna Yukhananov at ayukhananov@bloombergindustry.com