With the U.S. presidential race and Senate contests getting into high gear, one prominent biopharma analyst sees warning signs for the industry. Meanwhile, net prices fell in the first quarter, and the threat of 2020 drug pricing legislation remains, despite the ongoing pandemic.
After looking at recent political polling, Bernstein analyst Ronny Gal wrote that the industry could face more pricing risks after elections this fall. Aside from presidential polls, Democrats are polling strongly in several Senate races, he wrote, and could be in position to capture the majority of the chamber.
“Post-election, Democratic majority does spell likelihood of moderate limitations to U.S. pricing of drugs, but not revolutionary changes,” Gal wrote in a note to clients. Until the election, a “fear element” could hang over biopharma stocks, he figures.
Still, even if Democrats were in a position to move on drug prices after the elections, dramatic changes would be blunted by centrist Democrats, Republicans who could filibuster, and lawmakers in Massachusetts, California and New Jersey who would "not vote to destroy their home-state economies," Gal wrote.
On recent pricing trends, SSR Health has found that while list prices grew slightly in the first quarter, net prices actually declined. Drugmakers raised list prices by an average of 2.3% during the first quarter, but rebates and discounts pushed net prices down 2.6%. Looking forward, the analysts believe net prices will stop falling or grow slightly in the coming quarters.
Amid the COVID-19 pandemic, drug pricing talk in Washington has slowed, but that’s not to say there won’t be any action this year. Sen. Charles Grassley recently told Bloomberg he plans to push for a vote on his legislation this year despite the pandemic. And President Donald Trump still supports pricing action, Grassley told the news service.
Last week, the AIDS Healthcare Foundation urged the Senate to pass the legislation. The bill would help Medicare beneficiaries afford their medicines and punish drugmakers that raise prices above certain limits, according to AHF. The Congressional Budget Office has found it’d save Medicare $100 billion over 10 years.
“As we face the worst public health crisis in recent history, the stark reality is the market is simply not working to keep drug prices affordable,” AHF president Michael Weinstein said in a statement.
Lastly, in a new Forbes piece, former Pfizer R&D head John LaMattina highlighted changes to pharma’s reputation over the years, including a strong run for the industry in the late 1980s and early 1990s. LaMattina argues that Gilead’s pricing decision for COVID-19 therapy remdesivir will represent a pivotal moment for the industry going forward, echoing sentiments from other industry watchers.