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Big Pharma Backs Joe Biden, But People Don't Think He'll Fix Drug Pricing

Newsweek logo Newsweek 9/29/2020 Darragh Roche
a man in a suit standing in front of a building: Democratic presidential nominee Joe Biden leaves after speaking at a campaign event on September 27, 2020 in Wilmington, Delaware. Biden spoke on President Trump’s new U.S. Supreme Court nomination. Biden has garnered more donations from the pharmaceutical industry than Trump. © Getty Images Democratic presidential nominee Joe Biden leaves after speaking at a campaign event on September 27, 2020 in Wilmington, Delaware. Biden spoke on President Trump’s new U.S. Supreme Court nomination. Biden has garnered more donations from the pharmaceutical industry than Trump.

Former Vice President Joe Biden is winning the race for donations from Big Pharma but experts and industry stakeholders doubt his plans will successfully lower drug prices or address underlying issues in the industry.

The pharmaceuticals and health products industry has donated more than $5.9 million to Biden's presidential campaign, according to OpenSecrets.org, a site run by the Center for Responsive Politics, which tracks political donations.

President Donald Trump has garnered less than $1.5 million in donations from the industry, based upon FEC figures up to September 21. This stark contrast may be explained by the widespread criticism of Trump's approach to drug pricing.

Trump released an Executive Order (EO) on September 13 in an effort to lower drug prices under a "most favored nations" pricing scheme. Under the plan, Medicare would refuse to pay more for drugs than other developed nations, which generally pay less than the U.S. The measure covers Medicare parts B and D.

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Critics quickly rubbished the order. Criticism has come both from the industry and experts with a variety of views on the drugs market.

Dr. Wayne Winegarden of the Pacific Research Institute, a free market think tank, told Newsweek the executive order could harm patients.

"There are many problems with President Trump's most favored nation executive order," Winegarden said. "He fails to understand the drivers of the drug affordability problem, and his EO will harm patients, innovation, and could ironically increase overall healthcare spending."

"The EO fails to understand which patients are being harmed by high drug prices, and why. Remember, 90 percent of all drugs dispensed are low-cost generics. So fixing the drug affordability problem requires reforms that target those drugs driving the problem," Winegarden said.

Marc Samuels, a former policy adviser to the George W. Bush White House who also worked at the Pentagon Office of Health Affairs, agreed that Trump's executive order missed the mark.

"If the goal is to help patients, this rule fails," Samuels said. "Tying prices to other countries does not translate to lower out of pocket costs outright, and cuts of this nature will translate to reduced R&D investment and fewer cures in the future."

Prof. Marc-André Gagnon is based at the School of Public Policy and Administration at Ottawa's Carleton University. He sees the prevalence of political donations from pharma companies as part of the problem.

Gagnon pointed out that the pharmaceutical sector was the top lobbying industry in 2020, with spending of $156.6 million. He was also critical of large aspects of the industry.

"It is important to understand that political contributions do not necessarily aim at getting policymakers to implement specific policies or to preserve specific policies, or avoid the implementation of specific policies," Gagnon told Newsweek.

"It is more about imposing dominant shared narratives for policymakers across the aisle. Instead of regulatory capture, some prefer to call this this cultural capture, which is about dominating the entire intellectual environment in which officials make policy decisions, which means funding everything from PACs, think tanks, advertising, phony grassroots pressure groups."

Gagnon argued that "eliminating the intermediaries" might be the most efficient approach.

"Basically, insurers and PBMs [pharmacy benefit managers] were able to negotiate confidential rebates while patients were still paying co-payments based on the official price of the drug before rebates," he said.

"This policy forces insurers to transfer rebates to insurees and reduce their co-pays or deductibles. Note that this policy affects the revenues of health insurers but does not affect the revenues of drug companies."

Pharmaceutical Research and Manufacturers of America (PhRMA) represents U.S. biopharmaceutical research companies. In a statement, they also highlighted the role played by PBMs.

"After discounts and rebates, prices for brand prescription medicines grew just 1.7%, on average, in 2019, slower than the rate of overall inflation for the third year in a row," PhRMA said.

"But it often doesn't feel that way for patients, because middlemen like pharmacy benefit managers (PBMs) and payers often don't share the steep rebates and discounts they receive from manufacturers directly with patients at the pharmacy counter.

"That's why we need policies that will realign and strengthen system incentives, like increasing PBM transparency with employers, sharing more of the $175b in rebates, discounts and other price concessions directly with patients and ending the practice of compensating PBMs and other entities in the supply chain based on a percentage of the price of a medicine," PhRMA said.

"And when patients use manufacturer cost-sharing assistance to help pay for their medicines, plans should be required to count that assistance toward patients' deductibles and out-of-pocket limits. These policies will help lower what patients pay at the pharmacy counter without threatening to reduce or delay access to lifesaving medicines."

The Pharmaceutical Care Management Association (PCMA), which represents pharmacy benefit managers, strongly disputed these critical claims about PBMs. They pointed to a Government Accountability Office report showing rebates lower prescription drug costs.

"America's pharmacy benefit managers are the only part of the pharmaceutical supply chain working to reduce drug costs across the health care system," said Greg Lopes, PMCA's assistant vice president of strategic communications.

"While drug manufacturers are solely responsible for setting the price of prescription drugs, PBMs help keep prescription drug costs in check primarily by negotiating down the cost of drugs with drug manufacturers and pharmacies."

When asked about the presidential candidates' plans for drug pricing and accessibility, Lopes said: "Any approach to lowering prescription drug costs should start with increasing competition in the marketplace. PBMs support policies that accelerate the entry and availability of low-cost generic drugs, biosimilars, and interchangeable products into the market, including policies that would end patent abuses and other anticompetitive practices by drug manufacturers.

"Drug manufacturers are solely responsible for setting the price of prescription drugs. Increasing competition by promoting the uptake and availability of more generics and biosimilars in the market is the best way to ensure payers and PBMs have more negotiating leverage to lower drug costs for consumers. PBMs support a wide range of policy solutions to the problem of high drug costs, and the challenges to accessibility they pose," Lopes added.

Biden's plan, published on his campaign website, doesn't mention pharmacy benefit managers. The plan promises to "build on the Affordable Care Act by giving Americans more choice, reducing health care costs, and making our health care system less complex to navigate."

The Biden plan mentions negotiating prices five times but says nothing about Medicare Part D specifically. This is a problem for Gagnon.

"Biden proposes to allow price negotiations but, as compared to [Senator Bernie] Sanders' proposal, Medicare Part D could not refuse to reimburse a drug that does not provide value for money. Let's just say that negotiating without the capacity to say 'no' reduces a lot your bargaining capacity," Gagnon said.

"In itself, drugs bought through Medicare Part D represents 10 percent of the global market for prescription drugs (global, not U.S.). Drug companies will do whatever they can to avoid efficient negotiations from happening."

"In spite of complaints from the industry that are more for the show to preserve their dominant narrative, the Trump reforms represent no real threat for drug companies," he added.

"The main issue would be to allow real negotiations for drugs under Medicare Part D," Gagnon said. "Biden or Trump might say they are in favor of negotiations, but none have proposed a sensible plan that would allow efficient negotiations.

"At the moment, I do not see any real change in the long-term approach. It is likely that drug companies will remain the most important lobbyists, spending 50/50 on both sides of the aisle."

At this late stage in the campaign, it's unlikely Trump will make up the gap in pharma donations, particularly given the industry's criticisms. But it's not at all clear that Biden will deliver the real change on drug pricing he's promising.

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