By John Rother
Blog post from January 7, 2018
There were two big stories from the pharmaceutical industry this week, both reported by the Wall Street Journal: 1) Bristol-Myers Squibb intends to acquire Celgene in a $74 billion dollar deal; and 2) drug manufacturers have already hiked prices for hundreds of medicines for 2019. Both stories suggest that tough talk from President Trump isn’t working to restrain drug prices.
There is neither self-restraint nor discipline of “the market” in the pharmaceutical industry. Bipartisan oversight and legislative reforms are needed to rebalance incentives and rewards to protect taxpayers and patients while retaining incentives for real innovation. Fortunately, new leadership in the U.S. House of Representatives is pledging to take such action. The new Chairman of the Senate Finance Committee, Senator Charles Grassley of Iowa, also has a track record of vigorous oversight. Chairman Grassley led the fight to require that pharmaceutical makers report gifts to physicians (i.e. “the Sunshine Act”), which was included in the Affordable Care Act.
Pharmaceutical giants resist efforts to link their prices to independent reviews of their outcomes and relative effectiveness. They also resist honest accounting and transparency of the cost of drug development and the public subsidies that support it. Notably, Bristol-Myers Squibb is offering Celgene stockholders a special contingent payment if Celgene’s pipeline drugs win FDA approval. In other words, a performance-based reward is offered to shareholders, but not to patients and taxpayers. The costs of escalating drug prices are felt at the pharmacy counter as patient cost-sharing rises, felt by employers and workers in higher premiums, and by all of us as the strain on Medicare and other public budgets crowds out other priorities.
At the National Coalition on Health Care, we intend to work with the new Congress to bring some sanity and sunshine to the pricing practices of Big Pharma. Medicare and Medicare beneficiaries must get a better deal for drugs, and reforms must be made to end patent abuse that prevents competition from lower cost generic drugs. We must have sustainable policies that reward the discovery of true “break through” therapies but don’t require families to set up Go Fund Me pages, or result in insurance premium spikes that put coverage out of reach for more and more Americans.