As reforms make their way through Congress, Big Pharma’s ad campaigns are in full swing.
The ads are full of misleading claims designed to frighten patients and thwart reforms that would lower drug prices.
Don’t listen to their propaganda. These are the reasons their claims are false.
David Mitchell is a cancer patient and founder of Patients For Affordable Drugs, the only national, bipartisan patient organization focused solely on policies to lower drug prices.
This is an opinion column. The thoughts expressed are those of the author.
Big Pharma may not have found a cure for my cancer, but it has perfected the science of twisting facts that it doesn’t like to scare patients like me into believing that lowering drug prices will bring us great harm. This propaganda campaign is in full swing right now in the fight over reforms making their way through Congress.
The pharmaceutical industry and its operatives are bankrolling more than $23.7 million in ad campaigns opposing direct Medicare negotiation and repeal of the so-called “non-interference clause.” These ads are from PhRMA itself, Medicare Today, the Pharmaceutical Industry Labor-Management Association, the American Conservative Union, and other industry-allied groups. The ads are full of demonstrably misleading claims designed to frighten patients and thwart reforms.
It’s time to set the record straight: Lower drug prices are good for Americans.
Here’s why Pharma’s claims are false
The pharma industry says some members of Congress want to “repeal a protection in Medicare that protects access to medicines.” These ads are referencing the “non-interference clause” in Medicare Part D, which has nothing to do with determining which drugs patients can access under Medicare. The non-interference clause states that the secretary of Health and Human Services “may not interfere with the negotiations between drug manufacturers and pharmacies and prescription drug plan sponsors.” It was inserted into the Medicare Modernization Act after intense lobbying by the pharma industry and its allies to ensure drug corporations could dictate prices on brand-name drugs.
Big Pharma says Medicare negotiation proposals would enable government bureaucrats to “limit which drugs patients have access to.” But there are no congressional proposals that suggest implementing a government-imposed list to limit drug availability, or seek to change the long-standing policy under Medicare to cover drugs for all conditions, with at least two medications in each drug class. Drug price negotiation bills simply aim to achieve affordable prices for taxpayers and patients.
Pharma says negotiation would reduce access and “make it harder for people on Medicare to get the medications [they] need.” The biggest barrier to patient access is high prices. Right now, 1 in 3 adults do not take medication as prescribed due to cost. Without reform, more than 1.1 million Medicare patients could die over the next decade because they cannot afford to pay for their prescription medications. The Congressional Budget Office says lower drug prices achieved by negotiation would increase access and improve health – resulting in less money spent on medical visits and hospitalizations.
Pharma says Medicare negotiation will “stifle innovation and discovery of new medicines.” Rather, reforms like Medicare negotiation would reward clinically meaningful drugs with prices that stimulate innovation – not thwart it. As long as drug companies retain their current power to block competition and raise prices at will on old drugs to drive profits and trigger executive bonuses, they have far less incentive to take risk and invest in research and development to find innovative new drugs that could command high prices and save lives. If Medicare makes clear it wants to pay the best prices for the best drugs, negotiation will stimulate innovation as companies pursue those prices.
Pharma also says Medicare negotiation would import “European-style price controls.” Negotiation is a core tenet of a free market, not “European-style price controls.” The government negotiates for everything it buys, from aircraft carriers to copy paper. The federal government negotiates physician, hospital, lab, and durable medical equipment prices. The pharmaceutical industry is the only healthcare sector exempt from negotiation with Medicare. The proposal for negotiation would simply end special treatment for drug makers.
The pharma industry says policy proposals like HR 3 would “cost America thousands of jobs.” But the fact is, large, brand-name drug corporations could lose $1 trillion in sales over a decade and still be the most profitable industry in the nation. Given that the Congressional Budget Office found that even this sizable reduction in revenue would reduce the number of drugs coming to market by only 2-5% over a decade, drug corporations’ claims of widespread job loss are far-fetched.
Moreover, legislation that increases government spending on research and development through the National Institutes of Health can help to fuel more drug development and job opportunities in the private sector. It’s notable that Medicare negotiation is supported by the nation’s premier worker organization, the AFL-CIO.
If Big Pharma spent more time working on innovative new drugs and less time protecting its power to dictate high prices, we’d get more of what we seek: innovation we need at prices we can afford.
As the federal government considers a plan to lower the price of some costly drugs, researchers have found that while US cancer-drug prices consistently rise faster than inflation, our European counterparts have seen prices fall.
The US spends more than double what other industrialized countries do per capita on prescription drugs, and 79% of Americans agree that the cost of prescription drugs is too high.
A JAMA Oncology economic evaluation of cancer-drug prices in the US, England, Germany, and Switzerland (conducted by a group of researchers that included Dr. Kerstin Vokinger of the University of Zurich and Dr. Aaron Kesselheim of Harvard Medical School) suggests that the problem might be especially acute in cancer-drug pricing.
Drug prices keep going up in the US
The study, published in July, found that between 2009 and 2019, 74% of the 65 cancer drugs the group looked at increased in price faster than the rate of inflation. The median monthly treatment cost rose from $5,790 in 2009-10 to $14, 580 in 2018-19.
Meanwhile, only 13% of drugs in Switzerland, 2% of drugs in England, and zero drugs in Germany experienced similar price increases that rose faster than the inflation.
Much of this difference could be due to how these countries price drugs. The US doesn’t negotiate drug prices, allowing pharmaceutical companies to charge whatever they think insurers will pay. In the UK, Germany, and Switzerland, the government or an organization of insurers negotiate with pharmaceutical companies on drug prices.
Because of the lack of price increases, Vokinger, Kesselheim, and their colleagues found that over time, cancer-drug prices in Europe actually decreased over time when accounting for inflation.
But they found that there was no relationship between a drug’s effectiveness in reducing tumors and its price or price increase in any country.
Rep. Katie Porter, a California Democrat, accused AbbVie CEO Richard Gonzalez of lying to Americans and policymakers about why the pharmaceutical giant has dramatically increased the prices of some of its most popular drugs during a Tuesday House Oversight Committee hearing.
Using a whiteboard and paper cut-outs to illustrate her points, Porter argued that the pharma company falsely claimed that it raised the prices of its drugs in order to fund increased investments in research and development. She pointed out that the company spent just $2.45 billion on research and development between 2013 and 2018, while it spent $4.7 billion on marketing and advertising, and $50 billion on stock buybacks and dividends.
“So Mr. Gonzalez, you’re spending all this money to make sure you make money, rather than spending money to invest in, develop drugs and help patients with affordable, life-saving drugs,” she said. “You lie to patients when you charge them twice as much for an unimproved drug and then you lie to policymakers when you tell us that R&D justifies those price increases.”
She added, “The Big Pharma fairytale is one of groundbreaking R&D that justifies astronomical prices, but the pharma reality is that you spend most of your company’s money making money for yourself and your shareholders.”
The House Committee released a report on Tuesday finding that AbbVie raked in billions in revenue by raising the prices of two of its drugs – Humira and Imbruvica – in the US over the last 20 years. Since 2003, AbbVie has raised the price of Humira – which is used to treat rheumatoid arthritis and Chron’s, among other autoimmune and gastrointestinal illnesses – by over 470% with 27 individual price increases, according to the report. AbbVie has earned more than $20 billion in revenue annually for the last three years for Humira alone, making it the pharma industry’s best-selling drug.
A spokesman for AbbVie didn’t respond immediately to Insider’s request for comment.
Porter, who taught bankruptcy and commercial law at several law schools before running for office, has become well-known for using her “whiteboard of justice” to grill CEOs. A single mother, Porter says she also uses her whiteboard to keep her kids in line at the dinner table with a list of rules.
The health care sector has emerged as the most heavily shorted in the US stock market, in part as the industry faces the potential for sharper scrutiny by the Biden administration, according to a report published Tuesday.
Of the 10 most-shorted stocks on all exchanges at the end of March, six were shares of health care companies, said S&P Global Market Intelligence. The sector made up a hefty portion of the 20 most-shorted stocks, as well, with a tally of 12.
Average short interest in healthcare stocks was 5.17%, rising by 31 basis points from mid-March and by 53 basis points from mid-February.
Investors have increasingly shorted healthcare stocks as they considered possible regulatory and other efforts that Biden and the government may pursue, including reforms to lower prices for prescription drugs and addressing pharmacy mergers.
Biotech shares made up nearly all of the most-shorted healthcare stocks in March, with Esperion Therapeutics and Clovis Oncology topping the list. Esperion, which focuses on lipid management, had short interest of about 34% in its stock, and shares of Clovis had short interest of about 31%. Inovio Pharmaceuticals, which works on using synthetic DNA products to treat cancer and infectious diseases, had 26% short interest.
The S&P 500’s health care sector is lagging behind the gains on the broader S&P 500 index so far this year. Other areas of the market are finding more favor than the defensive health care sector as increasing COVID-19 vaccinations and fiscal stimulus boost prospects for reopening businesses across the country. The sector has advanced 7% compared with the S&P 500’s climb of 11%.
The top 10 most-shorted stocks stepped higher by nearly 45% when the year started to early February but have since suffered a decline of roughly 14% on the year, said the S&P report.