2024 forecast: Biden admin efforts show there's no pricing relief on the horizon for pharma

As the biopharma world readies for the turn of the calendar, the all-too-familiar topic of drug pricing once again presents an industry-wide overhang. In addition to the escalating regulatory scrutiny from the Biden administration in the recent months, the pharmaceutical industry can also count on political rhetoric heating up ahead of next year's presidential election. 

After a long stretch of victories for the drug industry, the Biden administration is clearly emboldened on the prospect of cracking down on pharma's U.S. pricing freedom. Amid the government’s efforts to usher in Medicare pricing negotiations under the Inflation Reduction Act (IRA), the administration has pursued several other avenues to attempt to rein in prices or boost pharmaceutical competition. Few of them are popular with the drug industry.

In May, the Federal Trade Commission filed a groundbreaking complaint against Amgen’s then-proposed buyout of Horizon, laying the groundwork for heightened scrutiny of the industry’s dealmaking. Many of the industry's largest companies rely on M&A to fill their pipelines and drive sales growth, so the FTC move could have been viewed as a shot across the industry's bow.

While that FTC effort didn’t lead to any tangible setback for Amgen and Horizon, the agency was able to derail an early-stage deal by Sanofi later in the year. In December, after the FTC moved to block the transaction, Sanofi pulled out of a licensing deal with Maze Therapeutics centered on the Pompe disease candidate MZE001. 

But the campaign to boost M&A scrutiny only forms one part of the Biden administration’s stepped-up enforcement of the industry. In November, the FTC challenged more than 100 “improper” patents owned by the likes of AbbVie, AstraZeneca, Boehringer Ingelheim, GSK and other companies that were listed in the FDA’s Orange Book. 

With the challenge, the government gave the companies 30 days to withdraw or amend their patent listings, or "certify under penalty of perjury" that the patents are proper, the FTC said. 

The FTC’s patent challenge came as somewhat of a surprise to Katie Rubino, the director of the life sciences practice group at the law firm Caldwell. In a recent interview, Rubino said the FTC and the FDA have typically been “hands-off” on their patent enforcement.  

“I think this is just the first in a series of different regulations and changes coming down the pike,” she said, adding that the administration’s efforts could escalate in early 2024. 

Her prediction is already playing out. Last week, President Joe Biden said the industry’s routine U.S. price hikes are a “rip-off.” During an event at the National Institutes of Health, the president explained several facets of its his administration’s response to high U.S. drug prices, including the aforementioned Medicare negotiations. 

“For too many folks, the cost of even just one drug can mean the difference between life and death, hope and fear,” Biden said. “This is all about fairness. It’s about dignity.” 

Besides Medicare price negotiations and the FTC’s crackdowns, the Biden administration also recently said it may pursue the long-debated “march in” authority to break patents on certain drugs that have benefited from government research. And in addition to that measure, the government is also seeking drug rebates when price increases on medicines outpace inflation. 

At the time of the Biden administration’s “march in” announcement, a spokesperson for the biopharma trade group PhRMA said the measure would constitute “yet another loss for American patients.” 

But PhRMA didn't stop there. Speaking to reporters around that time, PhRMA president Steve Ubl said the administration “has one of the most anti-innovation agendas of any administration,” as quoted by Politico.  

As PhRMA assesses its response to the “march-in” announcement, Ubl said his group is “not taking any tool off the table,” according to Politico. Part of the group’s response could include lawsuits. 

In all, the developments point to an “elevated temperature” when it comes to the current regulatory environment for the industry, Chad Landmon, chair of the intellectual property and FDA practice groups at the law firm Axinn, said in an interview. 

“Given that inflation and pricing of things generally is going to be a big issue, I would think that drug prices will probably come up once again,” Landmon said of expected political rhetoric in 2024.

The opinions voiced by Rubino and Landmon are shared by many of those in the industry’s executive offices and board rooms. In a recent survey of life science executives, Deloitte found that all surveyed execs believe pricing will have either a “great impact” or “moderate impact” on their organization in 2024.  

Most of them, 58%, said they expect a “great impact” from drug pricing, the firm said in its recent report focused on the industry outlook in 2024. That compared with 43% for those who expect a “moderate impact.” 

Meanwhile, as companies brace for 2026 Medicare price negotiations, courts will be busy wading through the legal arguments on the issue. Drug companies or industry groups have filed at least nine lawsuits challenging various legal aspects of the Medicare price negotiations, so it remains to be seen whether drugmakers can gain any legal relief.

Drug-price scrutiny tends to come in “waves,” Rubino noted. Based on the ongoing developments, it looks like the crest of this current wave could hit in 2024.