Buckle up, pharma. Your industry faces a 'pivotal' 45 days in D.C., analyst warns

Congress at dusk
With the budget reconciliation bill due on Sept. 15, debate on drug pricing reform will become heightened. (Getty Images)

If there was any doubt about the sincerity President Joe Biden wanted to convey with his appeal to Congress on drug pricing reform, he removed it by bringing his departed mom into the discussion.

Speaking in the East Room of the White House on Thursday, Biden recalled that Catherine Biden’s “prescription drugs were so expensive” that it took money from himself, his two brothers and a sister to cover the cost so she wouldn’t have to “exhaust the little savings she had.”

With that, Biden set the scene for what promises to be a contentious several weeks in Washington as Congress weighs potential measures to combat high drug costs.

“The D.C. front is going to get very busy,” Bernstein analyst Ronny Gal wrote in his weekly report on Monday. “It does seem like the next 45 days will be pivotal for the pharma sector.”

In Thursday's speech, Biden said he wants Congress to allow Medicare to negotiate prescription drug prices and implement price caps to penalize companies that mark up prices that “outpace inflation.”

Biden's appeal comes as debate on Capitol Hill is about to intensify. Details of the Democrats’ $3.5 trillion budget reconciliation bill were unveiled last week. House and Senate panels have until Sept. 15 for negotiations and revisions. 

In added evidence of the gravity of the talks, the pharma industry lobby group and Patients For Affordable Drugs have unveiled 7-figure ad campaigns to pressure lawmakers on the issue, Endpoints News reports.

While Gal believes the industry has enough support that it's unlikely that sharp measures will pass, he also has an ominous warning.

"The decision point is coming and some damage to the drug industry should be expected,” he wrote.

RELATED: Biden backs Medicare negotiations and price-hike penalties. But will Congress go along?

With a change of the guard in Washington and increased scrutiny on the industry, particularly following the controversial FDA approval and high price for Biogen’s Alzheimer’s disease drug Aduhelm, proponents of reform believe there's new a urgency for change.

Like Gal, they also see the coming weeks as critical. In a letter to lawmakers last month, Families USA, Lower Drug Prices Now and Patients for Affordable Drugs said that Congress has a “unique and time-limited window for crafting meaningful drug pricing reform.”

For its part, PhRMA trade group blasted Biden's proposals last week. In a statement, PhRMA CEO Stephen Ubl said the plan would "undermine access to life-saving medicines and fail to address an insurance system that shifts the cost of treatments onto vulnerable patients."

"The recent infrastructure bill is a reminder that bipartisan reform is possible, and patients deserve the same bipartisan leadership to help ensure they have access to their medicines with out-of-pocket costs that are affordable," Ubl added.

RELATED: Congress has a 'time-limited window' to shake up drug pricing, employers, health groups say

Meanwhile, Gal identifies other factors that suggest the situation is climaxing. As directed by Biden, the Department of Health and Human Services has until Sept. 23 to draft a strategy to reduce drug prices.

Additionally, the Medicare trustees report is imminent and could bring data that forces new legislation. Last year, the trustees reported that the program spent $328 billion in 2019 and warned that without reform, the fund would become insolvent in 2026.

“Especially with the (previously) discussed Medicare expansion, if insolvency is near, it would have to be addressed,” Gal wrote.