The drug industry is showing that even in a crisis, it can use its influence in Washington to fight off efforts to cut into its profits.
Industry lobbyists successfully blocked attempts this week to include language in the $8.3 billion emergency coronavirus spending bill that would have threatened intellectual property rights for any vaccines and treatments the government decides are priced unfairly.
Drug companies’ power to dictate terms as Congress struggles to address the growing U.S. outbreak is another sign of the uphill battle that likely awaits any broader bipartisan drug-pricing legislation. Both Democrats and Republicans have tried and failed in recent months to advance bills that would crack down on costs.
The pharmaceutical industry not only killed the intellectual property provision in the coronavirus package, but it got language added into the bill that prevents the government from delaying a medicine’s development over concerns about its affordability.
“The idea that drug companies should have free reign to set prices during an international pandemic is immoral and dangerous,” said Rep. Jan Schakowsky (D-Ill.), who led an unsuccessful push to ensure that coronavirus treatments developed with federal emergency funding would be priced fairly and available widely, in a statement to POLITICO.
The provision to bar the government from intervening when affordability concerns arise “blows up” existing legal measures to ensure fair drug pricing, said Jamie Love, executive director at Knowledge Ecology International, which has been lobbying for new drug development and pricing approaches to lower the costs of medicines.
The coronavirus package — which passed the House Wednesday and the Senate Thursday — includes about $3.1 billion to develop drugs and vaccines and expand manufacturing capacity. It would also cover purchases of medical supplies for state and local health departments to beef up the Strategic National Stockpile, the largest national repository of emergency treatments. Another $300 million would help the government buy vaccines and treatments once they are approved. Much of this money would directly benefit the drug industry.
The bill specifies that any products purchased must meet federal acquisition guidance “on fair and reasonable pricing.” It also empowers the HHS secretary to ensure that vaccines, drugs or diagnostic tests developed with the emergency funding “will be affordable in the commercial market,” without specifying how the government would determine a fair price.
But the legislation also says that HHS can’t delay the development of vaccines and treatments in an effort to maintain affordable prices — a win for the drug industry and Republicans, who argue that government constraints on pricing would limit private investment in coronavirus therapies. Republicans also told POLITICO they pushed back on Democratic attempts to add language that would have allowed HHS to set a drug’s price and limit increases to the rate of inflation.
Democrats initially pushed to give HHS the power to strip intellectual property protections from any vaccine or medication whose price it deemed too high, multiple sources familiar with the negotiation told POLITICO. Versions of the legislation circulating late last week included this language. But pushback from the drug industry and Republicans prompted lawmakers to strike it.
Stephen Ubl, the head of the drug industry's main lobbying group, PhRMA, told reporters Wednesday that pharmaceutical companies won’t take the huge risks that come with drug and vaccine development if the government has the leverage to strip them of their patents over pricing disagreements. The money in the spending bill does not cover all of these risks, he added.
“If collaboration with the government even in a limited way results in a loss of intellectual property or the government setting the price, it is going to have a chilling effect on both investment and collaboration at a time when we need more of both,” Ubl said, adding he had not seen the language in the final coronavirus package.
The drug industry is “firmly committed to bringing forth affordable solutions,” he added.
Senate Majority Leader Mitch McConnell said in a statement that he is glad the legislation moved forward without the “ideological strings” on drug pricing that House Democrats initially sought. “This is a moment where we need to empower and encourage our nation’s innovators,” he said.
House Speaker Nancy Pelosi’s office said in a statement that the bill “protects against price-gouging of these medicines developed with taxpayer dollars by ensuring that the federal government will only pay a fair and reasonable price for coronavirus vaccines and drugs and providing HHS the authority to ensure that they are affordable in the commercial market.”
But advocates for lower drug prices say that the drug industry got the better end of the deal, because the provision that bars the government from delaying a product’s development over price concerns could negate the legislative wins Pelosi touted.
The current affordability language “is worse than weak — it actually makes thing worse,” Love wrote in a blog post. He noted that the bill says only that the HHS secretary “may” take action to ensure products are affordable to the commercial market, while mandating that HHS Secretary “shall not” take actions to delay development of the products.
Now, Love wrote, companies will be able to “claim that anything that reduces the price reduces incentives to invest in more rapid development, and litigate that issue.”
A senior Democratic aide pushed back on the idea that the provision is a victory for Republicans and the drug industry. “That language is really a fig leaf for Republicans to take home to Big Pharma,” the aide said, adding that language won’t be applicable because “if there’s an actual purchase price to assess, that means that a vaccine has been successfully developed.”
But Rep. Lloyd Doggett (D-Texas), who with Schakowsky sought stricter affordability provisions, took aim at “the willingness of the pharmaceutical industry to advance its monopoly power no matter how serious the crisis.”
“A danger remains that the federal government will simply write a blank check signed to big pharma as a result of this crisis,” he said. “I’m pleased that the emergency funding language does refer to reasonable prices, but I would have liked it to be much stronger.”
Other drug pricing advocates characterized the bill as an incremental step in the right direction.
“That we're debating the language is a loss” for the pharmaceutical industry, said Alex Lawson, executive director of Social Security Works. “And at some point, people are going to start wondering why the federal government pays unreasonable prices on anything to pharmaceutical companies. And when that happens, that's when pharma’s whole house of cards starts falling down.”
Sarah Owermohle contributed to this report.
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How the drug industry got its way on the coronavirus - POLITICO
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