Sending mixed signals about his intentions, Biden recently tapped former pharma lobbyist Steve Ricchetti—who was one of Biden’s chiefs of staff when he was vice president—to serve as counselor in his administration. The appointment, which drew criticism from progressive group Justice Democrats, implies that Biden might go easy on Big Pharma.
Meanwhile, Ricchetti’s brother Jeff started lobbying for Horizon Therapeutics in August, covering Medicaid drug pricing.
“We are committed to working across party lines to advance research, promote patient access as well as encourage healthcare policies that support innovative breakthrough medicines,” Horizon says in a statement. The company declines to comment on Biden’s plan.
Baxter didn’t respond to a request for comment.
Still, any move to control prices would shake the business model of an industry accustomed to routine price hikes that far exceed the rate of inflation. AbbVie, for example, raised the net price of its blockbuster Humira 16 percent from 2016 to 2018, according to a drug-price watchdog, the Institute for Clinical & Economic Review, or ICER. Bowing to public outrage in 2017, AbbVie joined other big drugmakers in promising to keep annual price increases under 10 percent.
Days before the presidential election, AbbVie CEO Richard Gonzalez told analysts that the company assumes “there will be continued pressure on the industry as it relates to drug pricing.” Gonzalez said AbbVie’s business isn’t reliant on price, but on volume.
“That gives me confidence that we’ll be able to fare reasonably well even if there are changes,” Gonzalez said. “What I would hope the debate ultimately transitions to is copays and out-of-pocket costs for the patients because that is the fundamental issue.”
Rebate reform and limits on copays are considered low-hanging fruit in prescription drug legislation, because the powerful pharmaceutical lobby supports both, ICER spokesman David Whitrap says in an email.
“However, neither of these policies would help lower the underlying price of prescription drugs in the U.S., and they both would likely increase Medicare costs,” Whitrap says.
And while drugmakers might be in favor, the equally powerful health insurance lobby likely would fight proposals to ban the discounts they get from drug manufacturers or to limit their ability to shift costs to consumers. They warn that any such restrictions would lead to premium increases.
A call to improve the supply of cheaper generic drugs is “probably the best thing that could come out of the Biden plan,” Garthwaite says. “We need to pay more attention to whether we have a sufficiently stable and high quality generic market.”
But Biden’s plan to establish an independent review board could be a hard sell since it would likely lead to lower price tags for new drugs that don’t face generic competition. The board would assess the value of new drugs and recommend prices that ultimately would be paid by Medicare and any future public option.
Tying price to value “is something that other countries do and the reason that other countries don’t pay nearly as much as we do for drugs that are available there,” says Stacie Dusetzina, associate professor of health policy at Vanderbilt University Medical Center. “Not all drugs are worth the money.”