The Inflation Reduction Act’s prescription drug pricing provisions include price negotiations between Medicare and drug manufacturers for a limited subset of pharmaceuticals. Thus far, this particular stipulation in the law is subject to eight legal challenges. Six manufacturers and two industry groups have filed suits seeking to declare drug price negotiations unconstitutional or unenforceable.
Yet it’s the IRA’s drug pricing components that are viewed very favorably by voters on both sides of the political spectrum. Accordingly, the industry’s lawsuits to block Medicare from price negotiations are quite unpopular among constituents.
While some Republicans have talked about repealing the IRA, they’ve generally focused their attention on sections of the $737 billion bill which include green energy, climate change and bolstering Internal Revenue Service enforcement. They haven’t spoken as much about the IRA’s provisions aimed at lowering patient out-of-pocket spending on prescription drugs by seniors and disabled people enrolled in Medicare. There’s perhaps good reason for this, as it’s precisely these parts of the legislation that are resoundingly popular.
A national survey released two weeks ago shows that Americans overwhelmingly–by more than a five-to-one margin–oppose the pharmaceutical industry’s lawsuits attempting to impede Medicare from directly negotiating lower prescription drug prices. What may concern the industry is that by an almost four-to-one margin voters don’t believe the argument that lower negotiated prices will eventually lead to fewer new treatments.
It’s not as if the pharmaceutical industry’s line of reasoning is completely bogus. The IRA may reduce investment in research and development, which in turn could lead to fewer drug approvals down the road. The Congressional Budget Office estimated that the IRA’s drug price negotiations would result in “less innovation,” specifically two fewer drugs being brought to market over the next decade, five fewer pharmaceuticals in the following 10 year period, and eight fewer drugs in the decade after that. Furthermore, other estimates suggest steeper declines in approvals over time.
But it appears that this is not something the average person in the street takes note of. Nor do most people realize that high out-of-pocket expenses for consumers aren’t solely the result of drug company policies. Certain actors in the drug supply chain, including pharmacy benefit managers, also play a role. However, a nuanced discussion of drug pricing doesn’t resonate.
What folks want is immediate relief from the ever-increasing out-of-pocket costs on prescription drugs. And they see the drug industry as the number one culprit.
Seen in this light, only 18% of Americans view the pharmaceutical industry favorably. That’s a new record low in favorability ratings.
Moreover, according to the survey the legal actions taken to oppose what Medicare is implementing seem to be reinforcing the negative attitude many Americans have. Poll results show that the respondents who viewed drug firms unfavorably increased from half to two thirds upon hearing about the lawsuits.
Politically, there’s an electoral risk here for Republican incumbents and challengers alike, which may explain the reluctance of some legislators to side with the drug industry.
But there’s also a problem for the pharmaceutical industry itself in terms of its public image. Broader support among ordinary citizens can help shape what lawmakers do in Washington DC, to boost the industry’s fortunes, for example, through tax incentives, research subsidies and improvement in access to biopharmaceuticals provided under the government programs, Medicare and Medicaid.
On the other hand, a wary or critical public could harm pharma’s standing among legislators on both sides of the aisle. Consider, for instance, that among Democrats and even a number of Republicans there is backing for measures that could be more impactful than the IRA.
House Democrats want to expand the scope of the IRA by increasing the numbers of drugs eligible for negotiation while extending the applicability of negotiated prices to employer-sponsored health plans and those offered on the state insurance marketplaces.
And, while in office as President the now likely presidential nominee of the Republican Party, Donald Trump, issued executive orders that would have pegged the prices of certain pharmaceuticals to the average or lowest price among our peers. International price referencing may pose a greater threat to the pharmaceutical industry than any provision included in the IRA. As a reminder, Trump has repeatedly criticized the industry for “unfair pricing” behavior and “getting away with murder.”
In the end, the pharmaceutical industry must ask itself whether the fight against IRA drug price negotiations is worth pursuing. From a judicial perspective it may not be, as last week’s rejection by a U.S. District Court in Ohio of the Chamber of Commerce’s request for a court injunction suggests. Perhaps most concerning from the industry’s viewpoint is the fact that the judge ruled the “law established in the Sixth Circuit and beyond is clear: Participation in Medicare, no matter how vital it may be to a business model, is a completely voluntary choice.” It’s possible that this kind of legal reasoning becomes a recurring theme in judges’ decisions on the cases brought before them.
In addition, the litigation may backfire. It could cause an already adversarial Congress to become more so, on both sides of the aisle, as constituents voice their displeasure. For an industry that already has a public relations problem the suits challenging the legality of Medicare drug price negotiations may not be a hill it wants to die on.
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