Analysis Shows Pelosi Plan Could Reduce Development of 56 New Medicines Over Next 10 Years
The pharmaceutical industry continues its full-court press opposition to a prescription price reduction plan proposed by House Speaker Nancy Pelosi. A new study suggests that if the plan were to pass, it would result in at least 56 fewer new medicines for patients over the next 10 years.
A landscape analysis was conducted by the economic consulting firm Vital Transformation to examine the impact of tying the price of numerous medications covered by government-funded health plans to an International Pricing Index. And what the analysis found was the plan would be detrimental to the innovation provided by smaller and emerging U.S. companies that rely on venture capital to finance research and development. The analysis was conducted at the behest of the Pharmaceutical Research and Manufacturers of America (PhRMA), the Biotechnology Innovation Organization (BIO) and the Council of State Bioscience Associations.
The analysis, which was released Thursday, said that if the Pelosi plan were to become the law of the land, it would cut revenues by more than half for companies with affected medicines and would also lead to a “nearly 90% reduction in new medicines” developed by those smaller U.S.-based companies. The analysis provides an even more stark view than a report issued by the Congressional Budget Officer that suggested the plan would slow the release of between eight and 15 new drugs over the next decade.
Speaker Pelosi unveiled her plan in September that would allow the government to negotiate prices on up to 250 prescription drugs covered by government-backed plans such as Medicare. The government is currently prevented from negotiating prices. The legislation calls for the government to use the International Pricing Index to bring the prices of drugs covered by government programs in line with those prices paid by other countries, which is similar to the “favored nations clause” floated by President Donald Trump earlier in the summer. The Pelosi plan also calls for stiff financial penalties on companies that refuse to negotiate with the government.
As could be expected, the industry has been highly opposed to the idea of tying prices to an international pricing index. Since the plan was first announced, industry trade associations have been marshaling opposition to the bill, which has yet to come before the full House for a vote. PhRMA, BIO and other trade groups have all stressed that the plan would severely hamper industry innovation. Weeks ago, a letter signed by 44 different industry trade groups was sent to Congress outlining why the bill should be rejected.
Stephen Ubl, president and chief executive officer of PhRMA, said Thursday that the Vital Transformation analysis is “further evidence of the devastating impact” that the Pelosi plan could have on R&D and patient outcomes. Ubl suggested that there are other options available to curb price hikes rather than “blowing up the entire health care system.”
“… let’s focus on practical reforms such as capping out-of-pocket costs, making patients’ monthly costs more predictable, sharing negotiated savings with patients, enhancing competition from generic medicines and promoting value-based contracts,” Ubl said in a statement.
Jim Greenwood, BIO’s outgoing president and CEO, added that the new report “reaffirms” the negative impact of the price reduction plan.
“It’s imperative that we work to make the medicines of today more affordable, and it’s immoral to delay or deny the discovery of new cures and treatments for devastating diseases such as Alzheimer’s and Parkinson’s,” Greenwood said in a statement.
Earlier this year, the U.S. Chamber of Commerce unveiled a study that also opposed the idea of tying drugs to the IPI. The study predicted dire consequences that could limit options for many patients, including cancer patients.