{"id":1190601,"date":"2023-08-24T11:28:07","date_gmt":"2023-08-24T11:28:07","guid":{"rendered":"https:\/\/jacobin.com\/2023\/08\/ira-drug-prices-big-pharma-genentech-opposition\/"},"modified":"2023-08-24T11:28:07","modified_gmt":"2023-08-24T11:28:07","slug":"big-pharma-is-threatening-to-withhold-medicine-in-protest-of-regulation","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2023\/08\/24\/big-pharma-is-threatening-to-withhold-medicine-in-protest-of-regulation\/","title":{"rendered":"Big Pharma Is Threatening to Withhold Medicine in Protest of Regulation"},"content":{"rendered":"

The 2022 Inflation Reduction Act introduced modest drug pricing restrictions. In response, big pharma companies \u2014 which have seen record profits \u2014 are threatening to slow the rollout of a lifesaving drug.<\/h3>\n\n
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\n Between 2012 and 2021, drug companies spent substantially more on stock buybacks and dividends to reward shareholders than they did on research and development. (Lock Stock \/ Getty Images)
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A Swiss pharmaceutical company announced this month that it could slow-walk bringing a potentially lifesaving drug to market \u2014 in order to reduce the time that it could be subject to President Joe Biden\u2019s recently enacted federal price regulations.<\/p>\n

Those comments were made by the CEO of Genentech, whose parent company, Roche, has reaped as much as $10 billion from Trump\u2019s 2017 tax cuts, seeing its net income go up by an average of more than 50 percent, while its spending on research and development has increased by just 25 percent.<\/p>\n

Pharmaceutical giants like Roche are earning huge sums of money on record-breaking price increases<\/a>, reporting historic profits \u2014 and yet they\u2019re launching an all-out legal, media, and lobbying assault against the modest drug pricing restrictions implemented by Biden\u2019s 2022 Inflation Reduction Act (IRA).<\/p>\n

For two decades, Congress prohibited Medicare from negotiating drug prices like most other high-income countries<\/a> do. As a result<\/a>, pharmaceutical companies have been able to charge Americans substantially higher prices for their products than they do elsewhere. They\u2019ve done so even though the American public subsidized research and development costs for every drug approved for sale<\/a> in the United States between 2010 and 2019.<\/p>\n

Now, thanks to the new law\u2019s drug price provisions, Medicare can begin to negotiate lower prices for ten drugs beginning in 2026, with additional drugs added in subsequent years.<\/p>\n

In recent interviews, Roche\u2019s CEO and the CEO of its American subsidiary, Genentech, said that the companies may delay drug research and development because of the new pricing rules in the 2022 drug laws.<\/p>\n

\u201cWe have decided that we are not going to do certain [clinical] trials . . . because it is becoming financially not viable,\u201d Roche CEO Thomas Schinecker told reporters<\/a> in July. That same day, Schinecker told<\/a> CNBC that \u201cthere is an environment now that\u2019s starting to emerge, that, you know, certain medicines would not make it.\u201d In response to a request for comment from us, Roche disputed the gains that it made from the tax cuts, but did not provide details.<\/p>\n

Earlier this month, the health news site STAT<\/em> published an interview<\/a> with Genentech CEO Alexander Hardy in which he said that the company could delay the release of an effective drug for ovarian cancers in order to first ensure that it is approved to be sold to the largest population of patients before it is subject to the new price controls.<\/p>\n

\u201cNormally, we would develop it in a fast-market approach for ovarian cancer. That\u2019s the shortest path to patients . . . but that is a much smaller indication than prostate cancer, which would take three years longer,\u201d said Hardy. \u201cSo the dilemma we\u2019re facing right now is, do we go with the initial indication being prostate cancer and then hold off on the development and the approval [for] ovarian [cancer] because the clock will be started with prostate?\u201d<\/p>\n

He added, \u201cWe face a lot of difficult decisions to make, squaring the science and the societal patient unmet need together with the business case. It\u2019s frustrating that this is an artifact of government legislation, which is creating a disincentive for us to do the right thing for patients.\u201d<\/p>\n

Between 2012 and 2021, drug companies spent substantially<\/a> more on stock buybacks and dividends to reward shareholders than they did on research and development.<\/p>\n\n

Patients Get Sick, Shareholders Get Rich<\/h2>\n

Roche\u2019s shareholders have seen a windfall since Trump\u2019s tax cuts passed Congress in 2017. The company\u2019s net profits immediately jumped by nearly $2 billion to close to $11 billion in the following year. By 2022, profits had exceeded $13 billion, after steadily increasing for four consecutive years.<\/p>\n

The company did not commit to a comparable investment in research and development, increasing this spending at half the rate of its expanding profits.<\/p>\n

The CEOs\u2019 comments have represented the most concrete threats from the pharmaceutical industry that the IRA\u2019s drug price negotiation could mean worse outcomes for patients.<\/p>\n

After Biden\u2019s Centers for Medicare and Medicaid Services released guidance<\/a> related to the drug pricing provisions in June, the pharmaceutical industry\u2019s major lobbying group, the Pharmaceutical Research and Manufacturers of America (PhRMA), filed a lawsuit against the Biden administration. Lawyers charged<\/a> that the law\u2019s tax on firms that violate the drug pricing agreements goes against the \u201cexcessive fines\u201d prohibition in the Eighth Amendment.<\/p>\n

Four giant pharmaceutical companies \u2014 Astellas, Bristol Myers Squibb, Merck, and Johnson & Johnson \u2014 have launched lawsuits<\/a> against the drug negotiation plan as well. Roche and its subsidiaries have spent nearly $6 million on federal lobbying<\/a> efforts so far this year, including<\/a> on implementation of the law.<\/p>\n

Hardy, the Genentech CEO, told STAT<\/em> that \u201cwe\u2019re supportive of the legal action that PhRMA has taken<\/a>. We\u2019re considering all of our legal options right now.\u201d<\/p>\n

Genentech is a PhRMA member.<\/p>\n

The idea that pharmaceutical companies need enormous profits to sustain drug innovation \u201cis one of those zombie lies they\u2019ve been making for decades,\u201d said Steve Knievel, an analyst at the consumer advocacy group Public Citizen. \u201cThey make claims that anything touching their profits one iota is going to threaten innovation and that we won\u2019t get the cures we need. . . . The profits go way up, but the R&D [research and development] doesn\u2019t go up in conjunction.\u201d<\/p>\n

Knievel added that taxpayers already subsidize drug development by paying for federal medical research funding through grants<\/a>.<\/p>\n

\u201cWe the people, we undergird development through our tax dollars, through the $40 billion we budget to the National Institutes of Health,\u201d he said. \u201cSo long as we continue to support that early stage research, we should expect to get the new drugs that we need.\u201d<\/p>\n

Bill Lazonick, a professor at the University of Massachusetts Lowell who has studied<\/a> financialization in the pharmaceutical industry, echoed these concerns.<\/p>\n

\u201cThe pharma industry is basically saying, \u2018We have these profits, we need them to invest in innovation,\u2019 and they are not doing it,\u201d he said. \u201cJust setting the price at any level you want is not the way it needs to be done.\u201d<\/p>\n\n

You can subscribe to David Sirota\u2019s investigative journalism project, the\u00a0Lever<\/i>,\u00a0here<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

A Swiss pharmaceutical company announced this month that it could slow-walk bringing a potentially lifesaving drug to market \u2014 in order to reduce the time that it could be subject to President Joe Biden\u2019s recently enacted federal price regulations. Those comments were made by the CEO of Genentech, whose parent company, Roche, has reaped as [\u2026]<\/p>\n","protected":false},"author":138,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1190601"}],"collection":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/users\/138"}],"replies":[{"embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/comments?post=1190601"}],"version-history":[{"count":1,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1190601\/revisions"}],"predecessor-version":[{"id":1190663,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/posts\/1190601\/revisions\/1190663"}],"wp:attachment":[{"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/media?parent=1190601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/categories?post=1190601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/radiofree.asia\/wp-json\/wp\/v2\/tags?post=1190601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}