‘A Forever Battle:’ Patent Reform, Launch Prices, And Where Lower Rx Price Advocates Will Go Next
Executive Summary
Pharma’s opponents believe passage of the Inflation Reduction Act represents a momentum shift that will make it easier for politicians (even some Republicans) to take on the industry. They’ll need to count on that as they still have a long list of targets ahead on their lower-drug pricing agenda.
Lower drug pricing advocates didn’t get everything they wanted in the Inflation Reduction Act, but they believe the victories they did get, both in the literal policy sense and in the political sense, should help propel them forward for their next targets. Key items on the agenda: patents and launch prices.
That’s not to say any of the next steps will be easy.
“We will be fighting against pharma harder after the IRA is signed into law than we were before. There is no such thing as ‘Oh, pharma lost. Now it’s done,’” said Alex Lawson, executive director of Social Security Works. “[It’s] a forever battle with corporations that make billions of dollars and their money to protect their monopolies. But what we have won, even with all the holes drilled in it by pharma showing just how powerful they are, is fundamental.”
Does IRA Help Make the Case For Marching In?
Lawson argues that on a number of fronts the passage of the IRA should help accomplish some of drug pricing advocates next steps, which includes pressuring the Biden administration to respond to the Make Meds Affordable campaign’s petition to intervene on patents covering six drugs. (Also see "Xtandi March-In Fight Extended to Paxlovid, Insulin, HIV, Asthma And Hepatitis C Drugs" - Pink Sheet, 25 Mar, 2022.)
The drug industry has argued against “march in” rights for medicines like Astellas Pharma, Inc.’s cancer drug Xtandi (enzalutamide), in part by saying that the government doesn’t have the expertise to know what a fair price is and also that price alone is not a reason for the government to act, Lawson said.
But the IRA establishes that the government can indeed determine a “fair price” for drugs, Lawson said, thus weakening these arguments against both march in rights, which let the government license a drug patent to another party who could produce the drug more cheaply if the government provided funding for that invention, and against the government using its authority under 28 USC §1498, to authorize generic competition in exchange for reasonable compensation to the patent holder, regardless of whether the government helped develop the medicine.
“We think strongly that the IRA legally enshrining the idea of a fair price makes it completely obvious that the government has a duty to act on this,” he said.
‘Launch Prices Can’t Be Left Alone’
If advocates can win on march in or 1498, they’ll be able to expand their reach on drug prices to more Americans outside of Medicare and gain some leverage on the launch prices of new drugs, said Peter Maybarduk, the director of Public Citizen’s Access to Medicines Program.
The IRA doesn’t address launch prices and allows drugs many years on market before negotiation kick in.
But executive action on just a few drugs under these march in or 1498 could have ripple effects that lower drug prices overall, Maybarduk argued.
“If the Biden administration uses its executive authority it is going to have price effects on the market as a whole. If they act on Xtandi, if they act on PrEP, other drugmakers are going to get the message that they have to be careful about extreme pricing in general,” he said.
David Mitchell, founder of Patients for Affordable Drugs, said his group also plans to do more work on launch prices, particularly with the coming onslaught of one-time use gene therapies.
“Launch prices will not be left alone over the long haul. Structurally they can’t be, because we can’t afford it,” Mitchell said.
Patents Are ‘Foundation of Pharma’s Power’
Patients For Affordable Drugs also plans to work on patents but with a focus from the legislative end, concentrating on a handful of bipartisan bills that have made progress in Congress such as the Affordable Prescriptions for Patients Act, which cleared the Senate Judiciary Committee in July of 2021 and would prohibit product hopping. (Also see "Bills To Speed Generic Entry Once Again Clear Senate Judiciary Committee" - Pink Sheet, 29 Jul, 2021.)
“We continue to believe that the abuse of patents blocks timely competition from generics and biosimilars that can lower prices,” Mitchell said.
Tahir Amin, co-founder and co-executive director of the Initiative for Medicines, Access & Knowledge, described patent reform as the method to address the root cause of the US pricing problem.
“Patent reform gets to the foundation of pharma’s power, he tweeted 12 August upon House passage of the IRA.
The Campaign for Sustainable Rx Pricing, a coalition of health insurers, pharmacy benefits managers, and hospitals also plans to push on bipartisan patent legislation including on a bill introduced by Sens. Chuck Grassley, R-Iowa, Dick Durbin, D-Ill., and Thorn Tillis, R-NC, that would establish a taskforce between the Food and Drug Administration and the Patent and Trademark Office to improve collaboration.
PTO and FDA are also moving forward with their own joint initiative on patents and drugs that drug pricing advocates are closely watching. (Also see "FDA, USPTO Collaboration Could Expand Review Of Pharma Patents, Explore ‘Skinny Label’ Policy" - Pink Sheet, 6 Jul, 2022.)
While government price negotiations will achieve some discounts, patent reform that improves the landscape for generic and biosimilar competition is likely to lead to “the most effective price reductions,” said Aaron Kesselheim, the director of the Program on Regulation, Therapeutics, and Law at Harvard Medical School and Brigham and Women’s Hospital.
Advocates also expect industry counterstrike efforts to neuter or overturn the law in the courts or the next Congress. (Also see "Pricing Reform Advocates Poised For ‘Rearguard Action’ By Industry If Legislation Prevails" - Pink Sheet, 21 Jul, 2022.)
Political Power Shift
Some of these fights to come will be “bigger” than getting the IRA passed, Social Security Works’ Lawson acknowledged.
But the IRA victory is important progress for anti-pharma advocates because it has proven that the drug industry can be taken on and will be vulnerable in the future, he said.
For example, Rep. Kurt Schrader, D-OR, one of the only House Democrats to vote last fall against one of the first itinerations of the drug pricing reforms that made it into the IRA, lost his primary for reelection in May, a defeat blamed in large part on his allegiance to the pharmaceutical industry.
Schrader’s defeat should make other politicians less nervous to go against the drug lobby, Lawson predicts.
“Kurt Schrader carried the bag for pharma and then we sent him packing. This is a message that resonates. Pharma does not protect and cannot protect its own bagman. That is a message that resonates with politicians” Lawson said.
Lawson also touted vulnerbale Democrats response to Pharma CEO Stephen Ubl’s 4 August letter to every member of Congress urging them not to vote for the IRA, as an example of the current shift in power.
“Ubl sends out that lobbying note to every office saying we’re coming for you and [Senator] Mark Kelly who is in a live election, put it on Twitter, and was like, bring it on, I bet you that people hate you pharma more than they’ll hate me for trying to lower their drug prices,” Lawson said.
“That is a sea change and it really can yield amazing fruit in terms of creating a virtuous cycle where politicians see themselves rewarded for going hard at pharma. Pharma tries to fight back but that ends up helping electeds because everyone hates pharma. That is starting to happen. So in the sports analogy I think what we just saw was a momentum play. We’re not winning. The game is not over soon. But the momentum has shifted when the President signs this into law.”
Though no Republicans supported the IRA, some advocates believe the political costs of going after the industry has shifted for the right as well.
“Pharma also has now lost its veneer of invincibility. And so I think that’ll embolden policymakers on both sides of the aisle, not just Democrats, to be willing to take up market-based policies that fit within their political ideologies but can be impactful and lower drug prices by holding manufacturers accountable,” said Jon Conradi, spokesperson for the Campaign for Sustainable Rx Pricing, who previously worked for Republicans in Congress.
Another political reality is that the IRA’s lowering drug prices provisions saved the government money and this is politically attractive to politicians who want to seek ways to offset new federal spending with so-called legislative “pay-fors.” (Also see "Medicare Price Negotiation Savings Would Rise To $101Bn With Revisions To Legislation – CBO" - Pink Sheet, 12 Jul, 2022.)
“Lowering drug prices mean you can spend money,” Lawson said.