Pharma Group, Under Pressure, Punches Back on Prices

  • Industry responds to candidates’ plans, congressional scrutiny
  • Strategies include showing the high cost of drug failures

A top pharmaceutical lobbying group will begin a counteroffensive against scrutiny of industry pricing practices, responding to criticism from both major U.S. political parties in a contentious presidential election season.

“Our industry has become an easy scapegoat for the real and growing problem of patient access to affordable new medications,” Jim Greenwood, chief executive officer of the Biotechnology Innovation Organization, will say Wednesday at the group’s convention in San Francisco, according to a copy of remarks obtained by Bloomberg News. “My friends, we are fighting back.”

Industry and investor anxiety is mounting as presidential candidates ramp up their criticism. Republican Donald Trump has said he could save U.S. taxpayers billions by negotiating with drugmakers on drug prices for federal health programs. After Democrat Hillary Clinton tweeted in September that she would release a plan to fight drug costs, biotechnology stocks tumbled.

“I worry that we take progress for granted and investors can move to places with less regulatory friction,” Stephen Ubl, CEO of the Washington lobbying group Pharmaceutical Research and Manufacturers of America, said Saturday in an interview.

For election analysis from Bloomberg Intelligence, click here.

Scrutiny rose as Valeant Pharmaceuticals International Inc. and Turing Pharmaceuticals AG were lambasted by Congress this year for their practice of sharply raising prices on older drugs, and investors are urging biotech and pharma leaders to turn the tide in the increasingly biting national conversation on drug prices. Representatives of large mutual funds including Fidelity Investments, T. Rowe Price Group Inc. and Wellington Management Co. met with pharma leaders in March, exhorting them to defend their practices.

Valeant and Turing “have given the entire industry a bad name,” said Ira Loss, a senior health-care analyst at the Washington Analysis LLC research firm. “Research-oriented companies were slow to react and distinguish themselves from the companies.”

On Wednesday, BIO will hand out fact sheets to attendees with talking points to be used in defense of the industry. One key focus will be an attempt to shift more responsibility to insurers, who have called attention to drugmakers’ prices.

Sparring With Insurers

“Insurers have been throwing the pharma and biotech industry under the bus, which is short-sighted of them,” Joshua Bilenker, CEO of Loxo Oncology Inc., said Saturday in an interview at the annual meeting of the American Society for Clinical Oncology in Chicago. “The insurance industry has squeezed the consumer to make them mad.”

Insurers have instituted policies on drug reimbursement that harm patients, according to Greenwood’s remarks.

“When insurers accept patients with pre-existing conditions -- only to refuse to cover innovative medications -- there’s a name for that: It’s discrimination,” Greenwood, a former Republican congressman from Pennsylvania, plans to say.

While pharmaceutical innovation should be rewarded, a responsible, sustainable approach for doing so is needed to ensure patients have access to treatments, said Clare Krusing, a spokeswoman for the U.S. insurance industry lobbying group, America’s Health Insurance Plans.

“Pharmaceutical pricing is a black box, and in the current market, drugmakers have the power to set prices at whatever the market can bear,” Krusing said in an e-mail. “Transparency around drug pricing is a first step.”

Frequent Failures

Drugmakers also need to educate the public about the difficulty of developing novel therapies, PhRMA’s Ubl said. One out of 10 biotech companies turns a profit, and 90 percent of clinical research goes toward projects that ultimately fail, according to BIO.

“We should celebrate the failures as much as we celebrate the successes,” he said. “Americans want instant gratification, but they don’t realize that so much of the story of the industry is based on failure.”

Highlighting the frequency and costs of drugs that flop during development might not gain public sympathy, according to Washington Analysis’ Loss.

“I’m not sure that the fact that they fail in a lot of the efforts they undertake would necessarily translate into the public feeling any compassion for the pricing, but it’s certainly a story that needs to be told,” he said.

Clinton won her party’s California primary and laid claim to the Democratic nomination Tuesday night, making Greenwood’s speech timely.

“Fasten your seat belts, folks,” Greenwood plans to say. “This election is going to be fascinating, but it’s not going to be pretty.”

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