Photographer: Tim Robberts/Getty Images

In Washington’s Drug Price Fight, Plenty of Blame to Go Around

  • Drug price legislation could be attached to FDA bill next year
  • Pharmaceutical, insurance industries blame each other on costs

Two weeks before the U.S. decides on its next president, the health-care industry’s finger-pointing over drug costs is heating up. Insurers and pharmacy benefit managers blame pharmaceutical companies. Drugmakers blame insurers. And have you seen how much money the hospitals spend?

Whether Hillary Clinton or Donald Trump wins on Nov. 8, most of the players are betting that something will get done on the cost of prescription drugs. They’re laying defensive and offensive groundwork for when new laws are drawn up by a Congress that has spent the last year holding hearings on the issue.

A prime example is a new ad out Wednesday from the Biotechnology Innovation Organization, the Washington lobby group, making the case that high list prices don’t represent what drugmakers really get and that middlemen take a big cut.

“While the list price is often used in stories about prescription drug costs, it’s not what the drug company makes,” says a narrator. “Most of the control over the final cost to you, the patient, rests with your insurance company, or employer, or the PBM.” The ad push began last month and the group has plans for more, said Matt Gorman, a spokesman.

The blame game is getting more intense as lobbying groups see a must-pass piece of legislation to fund the Food and Drug Administration as a vehicle for price regulation. Every five years, the pharmaceutical industry negotiates “user fees” they’ll pay the FDA to review new drug applications. The current authorization of the law ends in September.

“We are very much focused on user fees as an opportunity,” KJ Hertz, senior legislative representative on AARP’s federal health and family team, said in an interview. “Everyone is looking for this to be an issue in 2017.”

Pricing Coalition

AARP, which represents seniors, is part of the Campaign for Sustainable Rx Pricing, along with Anthem Inc., one of the U.S.’s biggest health insurers, Wal-Mart Stores Inc. and the Blue Cross Blue Shield Association. The coalition has proposed having drugmakers submit for government review any price increases over 10 percent, and making it easier for generics to come to market.

Health insurers, who just six years ago were painted as villains during the passage of Obamacare, are relishing the turnabout now that drugmakers are the focus.

“These increases have got to stop,” said John Bennett, chief executive officer of Capital District Physicians’ Health Plan Inc., or CDPHP, a not-for-profit health insurer in Albany, New York. Last year, 22 percent of the premiums Capital took in for its commercial plans was spent on drugs.

“They are unsustainable for us as a society and they are morally wrong,” Bennett said in a telephone interview. “They are extracting profit out of a scarce resource that people need to survive.”

Pile On

Hospitals have jumped in as well. Two industry trade groups this month released a report that found average annual inpatient drug spending at community hospitals rose 23 percent from 2013 to 2015.

“The industry has proven time and time again it can no longer regulate itself,” Scott Knoer, chief pharmacy officer for the Cleveland Clinic, said in an Oct. 11 call discussing the report.

Clinton has released a plan for combating price increases that includes penalties for unjustified hikes, a federal group charged with overseeing drug prices and emergency importation of treatments from developed countries.

If Democrats win the Senate, there’s a chance Bernie Sanders, an independent representing Vermont, could chair the Senate Health, Education, Labor and Pensions Committee, which oversees the FDA legislation. Sanders this month denounced corporate “greed" in a tweet from his official account that called out Ariad Pharmaceuticals Inc. for the $199,000 price tag on its leukemia drug, sending the company’s shares down as much as 15 percent.

Saving Lives

Drugmakers have another powerful message -- their treatments save lives.

Pfizer Inc. in May introduced a TV ad where a male narrator ticks off the research, business and regulatory hurdles to bringing a new drug to market. Then the camera cuts to the man closing a medicine cabinet as he sees his young son behind him. “So after it became a medicine, someone who couldn’t be cured, could be -- me.”

Pfizer declined to say how much it was spending on the ad campaign. “Our hope is that if more people understand what it takes to bring a new medicine to patients, that together we can create a better environment for discovering treatments,” said Neha Wadhwa, a spokeswoman.

Blame Elsewhere

Pharmaceutical Research and Manufacturers of America, the Washington lobby group for the drug industry, has also attempted to put the cost of drugs in perspective through explanatory videos. In one, the group calls out the hospital industry, on which it said the U.S. is expected to spend $3.5 trillion over the next decade -- three times what PhRMA says will be spent on medicine.

The back-and-forth will likely only get more intense. Tim Wentworth, CEO of pharmacy benefit manager Express Scripts Holding Co., said on a conference call Wednesday he’s taking his argument directly to lawmakers.

“We are very, very much in Washington,” Wentworth said. “We are spending a significant amount of time with key legislators in the decision-making areas to make sure they understand exactly what it is that we’ve done and what we can do.”

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— With assistance by Katherine Doherty, and Chloe Whiteaker

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