Small Biotechs Waived From Drug Pricing Bill, Finance Chair Vows

A Senate leader crafting a drug pricing proposal is trying to win the support of centrist Democrats by promising to carve out exceptions for small biotech companies.

Those moderate senators are warning they won’t commit until they see all the details.

Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, said he’s promised that pharmaceutical companies with limited access to capital or that invest heavily in research could be exempt from central parts of his drug pricing bill, which he has yet to unveil completely. He outlined the components of the measure in June but has yet to release legislative text.

Andrew Caballero-Reynolds/AFP/Getty Images

Ron Wyden (D-Ore.) speaks to reporters as he walks to the Senate chamber to cast a vote on July 17, 2018.

The legislation would empower the government to negotiate with drugmakers for better prices and caps on drug price increases, Wyden said.

“I’ve talked my colleagues and said, ‘You can protect the consumer from being clobbered by the cost of insulin and other drugs and be sensitive to innovation. That’s a space where we can land,” Wyden said.

Wyden needs to win over all 49 of his Senate Democratic colleagues and almost all House Democrats in order to see his vision turned into law.

As they wait for the Finance chair to make his plan public, House leaders have moved forward with their own legislation that directs the government to negotiation for lower drug prices and cap price increases. That legislation—pegged to a wide-sweeping domestic spending bill that could be voted on in the House as soon as next week—has no carve-outs for small biotechnology companies similar to what Wyden has described.

Drug Pricing Bill in Jeopardy as Moderates Vote Against It

However, at least four centrist Democrats in the House have vowed to vote against their party’s domestic policy package. That means the proposal would have to change in some fashion for it to pass on the House floor. All Republicans are expected to vote against the massive spending package, which could total as much as $3.5 trillion.

Three Democrats, Reps. Kurt Schrader (Ore.), Kathleen Rice (N.Y.) and Scott Peters (Calif.) point to the House’s drug pricing provisions as the reason for their opposition, saying the proposal goes too far.

Innovation Concerns

The pharmaceutical industry has long warned that forcing drugmakers to lower their prices will mean fewer new medicines in the future as companies invest few dollars into research and development in response to sagging profits.

“We cannot and will not support the very dangerous idea of allowing the government to simply set prices,” Kenneth Frazier, executive chairman of Merck & Co. Inc.’s board of directors, told reporters earlier in September. “That is not negotiation and it is not good for the future health of the American people or the economy of this country.”

Democratic leaders argue this isn’t true and that major pharmaceutical companies are fleecing Americans because there are no restrictions on what they can charge for medicines.

“The bottom line is we’re being gouged,” Frank Pallone (D-N.J.), chair of the House Energy and Commerce Committee, told reporters Thursday.

Some Democratic senators say the fast rollout of Covid-19 vaccines shows the value of preserving the pharmaceutical industry’s pricing power.

“We’re still in the middle of a pandemic where vaccines that were developed by American companies in record time are a key part of why we have hope of coming out of this,” Sen. Chris Coons (D-Del.) said. “So at the same time we reduce out-of-pocket costs for patients, we need to make sure we’re protecting that innovation.”

Coons said Wyden hasn’t yet shown him details of his drug pricing plan.

“I don’t have any concrete proposal in front of me I can see and respond to,” he said.

Wyden said his legislation will protect smaller biotechnology companies from government negotiation and price caps. He said the legislation will “try to address their financial circumstances and try to factor that into what we’re doing.”

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

To contact the editors responsible for this story: Fawn Johnson at fjohnson@bloombergindustry.com; Robin Meszoly at rmeszoly@bgov.com