SECOND OPINION: PhRMA REDUXES SAME DEBUNKED ARGUMENTS ON INNOVATION

Big Pharma’s Innovation Rhetoric Designed to Keep Drug Prices High Rather Than Unlock True Breakthroughs for Patients

Last week, Big Pharma’s principal trade group, the Pharmaceutical Research and Manufacturers of America (PhRMA), released a report rehashing the same tired and debunked arguments on innovation that brand name drug companies have hidden behind as an excuse to keep drug prices high for years.

Big Pharma routinely assert research and development (R&D) costs justify out-of-control prescription drug prices and claim solutions to lower drug prices would threaten innovation into new breakthroughs. These arguments simply don’t hold up to the facts — and are part of a Big Pharma strategy to maintain the status quo where they can focus on gaming the system to block competition and keeping drug prices high, rather than on true innovation.

Multiple studies have found Big Pharma’s price hikes have very little connection to the cost of its development or improvements in drugs’ efficacy. In other words, brand name drug companies set the prices of their products, and hike prices, to maximize their profits — not because there is any true connection to innovation.

• “No Association” Between Drug Company’s Prices and Investments In Research & Development. A September 2022 paper in The Journal of American Medical Association (JAMA) Network Open examined a subset of 63 drugs approved by the U.S. Food and Drug Administration (FDA) between 2009 to 2018, representing around one-fifth of the drugs approved by the FDA during this time span. The researchers found that for this subset of drugs, “there was no association between estimated research and development investments and treatment costs based on list prices at the launch of the product or based on net prices a year after launch.” (“Association of Research and Development Investments With Treatment Costs for New Drugs Approved From 2009 to 2018,” JAMA Network Open, September 26, 2022)
• No “Meaningful Association Between Cancer Drug Prices And The Magnitude Of Benefit For Any End Points.” An October 2022 study in JAMA Internal Medicine found a lack of correlation between the prices set by Big Pharma on cancer drugs and their effectiveness for patients. “We did not detect a meaningful association between cancer drug prices and the magnitude of benefit for any of the end points,” the researchers wrote. “This suggests that cancer drugs are priced based predominantly on what the market will bear.” In other words, Big Pharma sets prices to maximize profits, not based on clinical value or outcomes for patients. (“Association Between US Drug Price and Measures of Efficacy for Oncology Drugs Approved by the US Food and Drug Administration From 2015 to 2020,” JAMA Internal Medicine, October 31, 2022)

Big Pharma also benefits from U.S. taxpayers carrying a substantial share of the load for R&D research intro true breakthroughs:

• “The U.S. Taxpayer Has Funded Research For Every Single One Of The 210 New Drugs That The FDA Approved Between 2010-16,” noted economist Mariana Mazzucato in a 2018 column for The Washington Post. “Yet the companies that have access to this research are increasingly viewing pharmaceuticals in the same way that banks view their financial product — opportunities for short-term returns.”

Big Pharma’s new report opens with a letter from PhRMA’s President and CEO Stephen J. Ubl and Gilead Chairman and CEO Daniel O’Day, who jointly tout, among other things, the alleged success of the pharmaceutical industry’s medical innovation over the past 25 years. One such example the executives cite is the progress in HIV treatments, stating, “We’ve…helped turn HIV/AIDS into a manageable condition.”

What they failed to mention is that Gilead itself delayed patient access to innovation that would have supported better health outcomes. In a particularly egregious case study in the Big Pharma practice known as “product hopping,” Gilead  purposely delayed the market entry of a less toxic version of their HIV treatment so that they could run out a longer period of monopoly on their existing treatments, then establish maximum exclusivity on the safer treatment — to boost profits at the expense of leaving patients waiting for the improved treatment option.

Policymakers should reject Big Pharma’s false arguments on innovation, and advance bipartisan, market-based solutions to hold brand name drug companies accountable, boost competition, and lower drug prices for patients.

Read more on how Big Pharma’s innovation arguments don’t hold up to scrutiny HERE.

Learn more about market-based solutions to hold Big Pharma accountable and lower drug prices HERE.