Biden is going after pharma

Richard A Meyer
3 min readMar 15, 2023

The Biden administration said it would penalize drugmakers for raising prices faster than inflation on 27 medications administered in doctors’ offices. Pfizer had the most drugs on the list, which includes AbbVie for its blockbuster rheumatoid arthritis drug, Humira, as well as manufacturers Gilead, Endo, Leadiant Biosciences, and Kamada.

One of the first provisions of the Inflation Reduction Act — designed to help lower prescription drug prices — that is taking effect is the requirement that pharma companies that raise the cost of their products more than the rate of general inflation will have to pay Medicare a rebate for those outsize price hikes.

According to a recent Kaiser Family Foundation report, from 2019 to 2020, the prices of half of all drugs covered by Medicare increased more than the rate of inflation. And among those drugs with price increases above even the modest 1 percent inflation in effect before the recent inflation surge, one-third had price increases of 7.5 percent or more.

The data did show that the average price increases in 2020 represented the slowest moderate annual hike since 2006. Some analysts have predicted that the rebate provision will lead big pharma companies to set higher prices for new drugs than they would have before the crackdown on price increases included in the Inflation Reduction Act.

Change is being forced on pharma

It doesn’t take a genius to figure out that massive changes are coming to drug pricing. Pharma has two options. First, they could give PhRMA a lot more lobbying money, which they are already doing, or they can prepare for the eventual coming changes. But what does this mean?

1ne: The big bureaucratic pharma company is going the way of the dinosaur. The future is doing more with less overhead.

2wo: There will be massive layoffs of salespeople who will be replaced with medical liaison people who can digitally connect with HCPs quickly and answer medical questions.

3hree: Due to price hikes, new drugs will be priced higher to make up for lost revenue.

4our: Insurers will have a more significant say in which drugs are approved treatments.

5ive: The primary job of CEOs will be to manage change and to prepare their organizations for the changes.

6ix: KFF research has consistently found prescription drug costs to be an important health policy area of public interest and concern. Eight in ten adults (83%) say the cost of prescription drugs is unreasonable, and most of those currently taking prescription drugs say affording their prescriptions is easy (69%).

7even: I expect DTC marketing budgets to be cut significantly, and DTC managers must draw a line from spending to ROI.

8ight: Shareholders will push back against CEO salaries and litigation designed to keep drugs from going off-patent.

The drug industry is long overdue for changes. Now, it will be forced on them, and no amount of lobbying money can help.

Originally published at https://worldofdtcmarketing.com on March 15, 2023.

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Richard A Meyer

Marketing and Political thought leader — Writer- Audiophile