The politics and PR of drug pricing

In the 1990s, as attention turned to health reform and price regulation, pharmaceutical firms put the breaks on drug price inflation. Neither reform nor price regulation came to fruition, so this was a response to what amounted to a political threat, as well as a potential PR problem. Could the same thing happen today?  Let’s look at some recent news.

Scrutiny of drug prices certainly gets companies and their investors’ attention. When congressional Democrats questioned large price increases of Valeant’s heart drugs, it’s stock price fell (Reuters, September 28, 2015).

Democratic lawmakers on Monday attacked “massive” price increases of two heart drugs by Canada’s Valeant, fueling a rout in drugmaker shares on worries of a government and insurer clampdown on U.S. drug prices. […]

Shares of Valeant tumbled 16.5 percent on the New York Stock Exchange, and other pharmaceutical company shares also slid. Investors are worried that the drug industry faces a moment of reckoning for steep price hikes for both new and older medicines.

Shares of many pharmaceutical companies have slumped since 2016 Democratic presidential hopeful Hillary Clinton last week proposed ways for the government to prevent “profiteering” by the industry.

Some in the industry doubt Congress will pass a drug price control bill, like the one Hillary Clinton has proposed. If true, we’re witnessing what will amount to political pressure bad PR, just like the 1990s. From later in the same Reuters piece:

Clinton last week unveiled a plan that includes a $250 monthly cap on out-of-pocket costs for prescription drugs. It would allow the Medicare plan for the elderly to negotiate drug pricing and permit Americans to buy drugs more cheaply from other countries. […]

Industry experts are skeptical that Clinton, if elected, could overcome tremendous Republican opposition to such measures in Congress. But her high-profile focus on the issue is expected to embolden efforts by health insurers, doctors’ groups and others to pressure drugmakers.

Not to be outdone, the Obama Administration sent letters to four hepatitis C drug manufacturers seeking information about their pricing and rebates — as well as value-based purchasing arrangements — complementing other steps to try to address the price of prescription drugs (The Hill, November 5, 2015).

The Obama administration is stepping up its involvement in the debate over drug prices, sending letters to pharmaceutical companies and state Medicaid programs on Thursday asking questions about cost and access. […]

[T]he administration says it recognizes that with the anger raging over high drug prices, it needs to take action. […]

The letters come two days after the administration announced a forum on drug prices slated for Nov. 20. […]

President Obama proposed allowing Medicare to negotiate drug prices in his budget in February as well, but Republicans in Congress are largely opposed to that effort. […]

[T]here are some signs of Republicans getting involved in the issue. Sen. Susan Collins (R-Maine) announced a Senate Aging Committee investigation into high drug prices on Wednesday. […]

The administration sent letters to four drug companies asking about the possibility of “value-based purchasing” for Medicaid, with the idea that the system could save the states money. Under value-based purchasing, Medicaid would pay a price for a drug based on how effective it is shown to be.

More about the administration’s forthcoming forum from The New York Times (November 3, 2015). More about the Senate investigation from PRNewswire-USNewswire  (November 4, 2015).

Perhaps all this drug price scrutiny and political pressure is having an impact. In an unusual move counter to its longstanding unanimity, PhRMA is criticizing some “bad actors” that are raising drug prices and exacerbating the industry’s PR problems (STAT, November 6, 2015).

Not long ago, it would have been almost unimaginable for PhRMA — short for the Pharmaceutical Research and Manufacturers of America — to criticize any company in its field. But faced with nationwide rebukes and attacks from presidential candidates over drug prices, the industry group is confronting a public storm unlike any in years. In response, according to lobbyists, congressional aides, and pharmaceutical executives, PhRMA is not only aggressively criticizing what it perceives as bad actors but also deliberating internally how to rehabilitate the industry’s image. […]

[I]n her 15 years at PhRMA, [Lori Reilly, PhRMA’s executive vice president for policy and research] had never seen the group publicly rebuke a drug company like it had with Turing and Valeant. […]

[A]n August Kaiser Family Foundation poll showed the drug industry was viewed less favorably than insurance companies by the public. […]

[The industry’s] unanimity could be tested as its members debate about how much, even in this difficult time, to deviate from an established game plan that has served them so well for so long.

One, among several, responses to the uproar about prices came from Pfizer, which is expanding its financial assistance to patients who cannot afford its products (AP, November 6, 2015).

Pfizer Inc. says it’s doubling its income limit for people to receive dozens of its medicines without a copayment because more patients need help. […]

Most drugmakers offer patients financial assistance, particularly when pricey new drugs are first launched and the companies are trying to win over doctors and patients, to recoup their $1 billion-plus in development costs.

Also, the industry’s 20-year-old Partnership for Prescription Assistance connects patients to about 475 assistance programs, nearly 200 of them run by drugmakers. […]

Under the Pfizer RxPathways program, the company will cover patient copayments for 44 medicines for both uninsured and underinsured patients earning up to four times the federal poverty level, up from twice that level. The new limits are $47,080 annually for a single person and $97,000 for a family of four. […]

Last year, the RxPathways program helped about 350,000 patients. Pfizer expects to help a few hundred thousand more than that next year. Between 2010 and 2014, the program helped nearly 2.5 million people get more than 30 million Pfizer prescriptions worth more than $7 billion at list prices. […]

Asked why Pfizer doesn’t just reduce prices for its drugs in the U.S., where medicines generally cost a few times more than in other wealthy countries, Read said high prices are needed to fund innovative research on future drugs. That’s long been the industry’s mantra.

Perhaps the political heat is playing a role in moderating drug price increases (STAT/Pharmalot, October 26, 2015).

A new analysis finds that prices rose 9.1 percent through Sept. 30 for all types of medicines, which trails the 10.9 percent increase seen in 2014. […]

[P]rice hikes for brand-name medicines through the first nine months of this year amounted to 13.1 percent, below the 14.8 percent registered in 2014. And prices for specialty medicines – typically, these include expensive injectable drugs for harder-to-treat diseases – climbed 7.3 percent, less than the 9.7 percent seen last year. […]

[M]ore notable is the slowdown in price increases for generic drugs. Through September, prices rose 2.6 percent, considerably less than the overall 4.9 percent increase seen in 2014.


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