Big Pharma Invests Millions as Congress Prepares Drug Pricing Bills

As millions of Americans skip their medication due to the ballooning high prescription costs, Congress is seeking ways to cap drug pricing.

The legislative effort, however, touched a nerve in the deep-pocketed pharmaceutical industry. Big Pharma’s largest trade group, along with its front groups and conservative organizations that receive funding from the industry, pushed back with millions of dollars of spending.

Prices of more than 3,400 drugs surged in the first half of this year, compared with 2,900 drugs that experienced a similar price hike a year ago, CBS News reported. Costs spiked by an average rate of 10.5 percent, five times the rate of inflation, the article noted.

Meanwhile, a third of uninsured Americans cannot afford to take their medication, and almost half of those who are not covered by insurance asked their doctors for cheaper options. House Speaker Nancy Pelosi (D-Calif.) unveiled her party’s plan last week to give the government a say in prescription drug price-setting. Dubbed the Lower Drug Costs Now Act, the legislation would allow the government to negotiate the Medicare price of up to 250 medications each year, including insulin, the cost of which tripled over the past decade.

Under the bill, companies that do not comply would face steep fines. The idea irked many Republicans, including Senate Majority Leader Mitch McConnell (R-Ky.), who said the Senate would stop the bill cold. The Senate rolled out its own legislation to lower drug costs, which the Senate Finance Committee passed in July. A bipartisan effort, committee Chairman Chuck Grassley (R-Iowa) and Sen. Ron Wyden (D-Ore.) championed a drug pricing bill that would cap the annual drug price hike and limit out-of-pocket expenses for Medicare beneficiaries.

The Senate bill would not, however, provide ground for price-setting negotiation between the government and drug companies.

President Donald Trump has praised both bills for addressing the sky-rocketing drug prices — a key issue during his 2016 presidential campaign. One of his proposals — establishment of an international pricing index — is now being reviewed by the White House.

Nevertheless, many Republicans are reluctant to get behind price-setting bills, saying such legislation poses a government overreach to disrupt a well-functioning program.

Pharmaceutical companies, which stand to lose the pricing power over top-selling drugs, are writing large checks to key lawmakers and spending millions on ad buying and lobbying. The industry is against some of the hard-line measures and the Trump administration’s international pricing proposal, but is willing to back the expense cap for seniors covered by Medicare in the Senate bill and negotiate on other provisions, the Wall Street Journal reported.

Pharmaceutical Research and Manufacturers of America (PhRMA), the industry’s largest trade group, issued a statement opposing Grassley and Wyden’s bill after it cleared the Senate Finance Committee, claiming it would harm patients.

Some with rich connections to the pharmaceutical industry are now working for the Trump administration. Alex Azar, secretary of Health and Human Services, was the president of Lilly USA, a branch of drugmaker Eli Lilly. The company faced a class-action lawsuit for tripling the price of insulin under Azar’s watch.

Eli Lilly has spent $4.2 million on lobbying so far this year. Dave Boyer, former White House special assistant to President George W. Bush between 2007 and 2009, is now lobbying on behalf of the company.

As usual, the industry is giving campaign cash to key decision makers in Congress. House Minority Leader Kevin McCarthy (D-Calif.) received $205,100 from those affiliated with the industry this year, the most among his congressional colleagues. The industry also gave $135,486 to McConnell’s campaign during the 2020 cycle thus far.

The House Ways and Means Committee, one of the committees that will consider the Democratic House bill, recently released a report stating that drug prices in the U.S. are “unfairly high.” Rep. Richard Neal (D-Mass.), committee chairman and co-sponsor of the legislation, received $67,500 from the industry during the 2020 election cycle.

Some of the top recipients of money from the industry are lawmakers who face upcoming challenges during the 2020 election cycle. Sen. Thom Tillis (R-N.C.), who received $163,897 from the industry, is only two points ahead of his potential Democratic opponent Cal Cunningham in a recent North Carolina poll.

Drugmakers and health product dealers have spent $4.2 billion in lobbying since 1998, ranking first among all industries. PhRMA has spent $16.3 million on lobbying this year. More than 70 percent of its lobbyists previously held a position in government.

PhRMA has spent $3.5 million running Facebook and Twitter ads since last May. Most ads blame hospitals and insurance companies for high drug prices and oppose the establishment of an international pricing index. The group’s Let’s Talk About Cost campaign, which started running TV ads in July, said 40 percent of the medicine price goes to benefit insurance companies, government entities and pharmacy benefit managers.

PhRMA also announced a “national multi-year” ad and public relations campaign on behalf of America’s biopharmaceutical companies in 2017, appealing for support for medicine research and treatment development. The ad blitz is estimated to cost millions of dollars each year.

“If Washington isn’t careful, we might leave innovation behind,” one of the ads said. “Let’s fix the system the right way. Innovation is hope.”

The trade group previously ran similar ads for multiple side projects such as Prescription for Medicare and ProtectRX, which hit pharmacy benefit managers for contributing to rising drug prices.

Tax records show that PhRMA also funded healthcare coalitions and conservative groups, doling out billions of contributions in recent years. America First Policies Inc., a pro-Trump dark money group, received $2.5 million from PhRMA in 2017.

The trade group also gave American Conservative Union $150,000 in 2017, tax records show. Coalition Against Socialized Medicine, a project of the conservative group, spent $10,900 promoting Twitter ads attacking Pelosi and the House drug pricing bill. The project labeled the legislation “socialized medicine,” stating that the House bill would allow the government to seize control of the healthcare system and restrict patient access to medical care.

Other groups bolstered the effort. Alliance for Aging Research, which received $64,250 from PhRMA in 2017, spent almost $40,000 running similar ads on Facebook, attacking the Institute of Clinical and Economics Review for evaluating the cost-effectiveness of drugs. The evaluation, the group said in an ad, threatens access to affordable medical coverage of senior patients.

Emerging as a Facebook-based campaign criticizing drug companies for the high drug costs, Citizens for Truth in Drug Pricing has spent more than $200,000 running digital ads on the platform. Most of its ads ran on conservative radio talk show host Hugh Hewitt’s Facebook page, which has almost 130,000 followers. Stephanie Miller, a liberal political commentator and comedian, also promoted the ads on the Facebook page of her show.

AARP, a group representing the country’s retired community, is in a decades-long partnership with UnitedHealth Group, the largest health insurance company in the country. AARP announced its support for the Senate bill on drug price reduction, and UnitedHealth promised in March that insurers will expand drug discounts to benefit patients.

AARP spent $3.7 million on lobbying this year while UnitedHealth spent $2.2 million. The association has spent almost $3 million on Facebook ads since last May, some of which call for lower prescription drug costs. The group’s executive vice president, Nancy LeaMond, is the former chief of staff to U.S. Trade Representative Charlene Barshefsky.

Correction: The story has been corrected to reflect the right title of House Speaker Nancy Pelosi.