Debunking Big Pharma

Summary: Given that drug companies still set launch prices under the IRA, nine years provides ample time to generate and ensure substantial returns on investment and to cover R&D costs for new innovations as well as research on new indications for already approved products. If drug companies want to equalize time to negotiation for small molecules and biologics, they should both be nine years–not 13. Research shows that small biotech companies that are exempt from Medicare drug price negotiation are engaging in a majority of clinical trials and early-stage drug R&D development.

Patient Perspective: Don Kreis’ daughter, Rose, lives with a type of cystic fibrosis for which the current breakthrough medications don’t work. Rose is still waiting for her miracle drug, but Don fears when it comes to market, Big Pharma will price it out of reach. “When a new drug comes to market, will she be able to even consider taking it? No one cares more about innovation than us — but these drugs are worthless if Rose can’t afford them,” he writes.

Summary: PhRMA’s figures come from a survey conducted by a firm that works almost exclusively with and appears to receive its principal funding from the pharmaceutical industry.

Patient Perspectives: Katherine Pepper, a Washington patient who lives with an autoimmune disease, takes Humira, a medication that has a monthly price of $6,409. As Congress was considering the Inflation Reduction Act, Katherine wrote, “As a senior living on a fixed income, I’ve had to choose between filling my Humira prescription or buying groceries. That’s a decision no one should have to make.”

Therese Humphrey Ball, an Indiana patient living with multiple sclerosis, shared about a time when she couldn’t access her medication at all because of its price. “In 2017, I was forced to go off of Copaxone entirely because I simply could not pay its $6,000 monthly cost,” she writes. “Without the medication I needed, I began having difficulty with my cognitive function. I work really hard to keep my life in order and my memory intact even with MS, so this was devastating. I lost something that is so valuable to me.”

Vanessa Ladson, a Delaware patient living with lupus and fibromyalgia, wrote, “I am on a fixed income, and I have to scrimp and save just to be able to eat. I can’t afford all of my prescriptions, including the blood thinner Eliquis, which is priced at $500 per month. Instead, I take a cheaper drug that gives me a higher risk of bleeding.”

Summary: The number of “benchmark” plans available with no premium for people enrolled in the Part D Low-Income Subsidy (LIS) program dropped from over 600 in 2007 to 90 in 2024 – the bulk of the decline pre-dates enactment of the IRA. 

Summary: Lower negotiated prices could slow the progression toward the out-of-pocket cap threshold, but this does not result in higher out-of-pocket costs for people on Medicare overall. In fact, under the IRA, about 11 million Part D enrollees are expected to reach the $2,000 out-of-pocket cap in 2025 and these enrollees are projected to have average out-of-pocket savings of about $600 per enrollee in 2025.