Pharma giants are acting quick to praise their efforts in assisting the Trump administration in reining in runaway drug prices, but behind the scenes the industry has been lobbying profusely to roll back recently mandated medicine discounts for U.S. seniors.
Drug companies are beginning to focus in on lobbying efforts to use lame-duck session of Congress to strip a legislative loss they suffered earlier this year, according to people familiar with the efforts. According to one particular estimate, the drug industry has $1.9 billion on the line next year. Some critics believe the industry’s efforts hold the potential to increase costs for some of the most defenseless and medically fragile Americans: seniors on Medicare.
Medicare covers most drug costs until a patient and their plan spends $3,750. From that point coverage then drops off and doesn’t pick up again until a patient’s total out-of-pocket costs, including what drug companies pay in discounts, reach $5,000.
Data from the Medicare Payment Advisory Commission shows that nearly 30 percent of seniors fell into the donut hole in 2014, while more are being affected as prices rise for drugs to help treat conditions such as diabetes, arthritis and cancer.
To make the donut hole less strenuous, pharmaceutical companies are now required to give a 50 percent discount on their products once seniors hit the spending threshold. A legislative change in February backed by both parties further increased that industry discount to 70 percent.
That particular extra discount is exactly what drugmakers desire to roll back, in which they claim, ‘goes too far’ and that the drug industry is ‘taking too much of the expense.’ The lame duck session may become pharma’s best, last chance unless Republicans hold on.
Pharmaceutical companies are against Democrats, who are opposed to rolling back the larger discount of 70 percent, however, it may also struggle with the Trump administration, which made lowering drug costs for consumers a policy priority.
In response, the industry increased its muscle in Washington, while giants such as Johnson & Johnson, Amgen Inc., AstraZeneca Plc and Eli Lilly & Co. boosted spending on lobbying by 30 percent or more in the third quarter, according to an analysis of filings by Bloomberg News.
“We support reducing the manufacturer coverage gap rebate percentage,” Ruud Dobber, president of AstraZeneca U.S., said in a statement.
According to lobbying disclosures filed with Congress, Johnson & Johnson spent $1.98 million during that period, more than twice its expenditure during the same period a year earlier. The company claims the increase was to pay dues to trade associations, while its disclosure forms listed “issues related to Medicare Part D,” as the prescription drug program is known, as a key policy it sought to influence.
“Closing the donut hole is a good thing,” Pharmaceutical Research and Manufacturers of America or PhRMA, spokeswoman Juliet Johnson said. But the way it was done earlier this year “was wrong for seniors.”
“This was a rushed and ill-considered change,” the Biotechnology Industry Organization, which represents biotechnology companies, said in a statement. “We will continue to make the case to lawmakers in both parties for a fix.”
PhRMA wants insurers, whose share of drug costs was reduced in the new law, to pay more of the bill. However, drug industry critics say that is misguided. “If you shift it back onto the plans, I’m only going to pay more in out-of-pocket or in premiums,” said David Mitchell, who runs the drug price advocacy group Patients for Affordable Drugs NOW. “Why would we revisit this? Why would we even be talking about this? Except that big pharma is unaccustomed to having things happen to it by congressional action that they do not like.”