After Democrats unveil drug price negotiation plan, industry blasts it as 'misguided'

Legislation aimed at slashing high U.S. drug costs could undercut its own goals by depriving drugmakers of incentives for developing blockbuster medicines, plus lower-cost biosimilars and generics, several analysts and industry groups have warned.

Last week, Senate Democrats narrowly eked out a deal on legislation that would give Medicare the power to haggle for lower drug prices. The Senate on Wednesday released text of the bill that would allow the Department of Health and Human Services (HHS) to pick 10 drugs up for cost negotiation starting in 2026. That number would then gradually increase over the next several years.

So far, the reaction from analysts and industry experts has been resoundingly negative.

The legislative provisions put forward aren’t “just a step backward,” according to Michelle McMurry-Heath, president and CEO of the trade group the Biotechnology Innovation Organization (BIO)—but could in fact “propel us light years back into the dark ages of biomedical research.”

“The misguided legislation, which is largely similar to a proposal floated last year, includes risky medical price control tactics that will ultimately harm the very patients and seniors that lawmakers claim to be helping,” McMurry-Heath said in a statement.

The bill would take a “disproportionate” toll on small biotechs, McMurry-Heath added, which are behind “the lion’s share of medical innovation” and “rely on a healthy investment environment to stay afloat,” she said.

In a departure from the drug pricing bill that passed the House in November, the Senate’s text has a provision for delaying price negations on biologic drugs, should there be a cheaper biosimilar option nearing the market, Bloomberg Law notes in its own report on the drug pricing landscape.

But biosimilar and generic drugmaking outfits may have “very reasonable gripes and complaints” with the proposed legislation, which “arguably pours cold water on their opportunities to compete,” Antonio Ciaccia, CEO of drug pricing data company 46brooklyn Research, told Bloomberg Law. That's because the bill could introduce uncertainty around which projects to pursue, he argued.

Meanwhile, the drugs up for potential negotiations would be among the highest expenditure meds in Medicare Parts B and D, Bloomberg Law notes, and those drugs could in turn fall victim to pricing regulation simply because they are high volume. That could hurt industry incentives to advance drugs that reach large numbers of patients.

Meanwhile, the industry outlook hasn't been much better over at PhRMA, which released its own statement alleging the pricing provisions “went from bad to worse for patients.”

The industry responses come as Congress gears up to assess a revised budget reconciliation package this week, part and parcel to which is a legislative proposal to cut prescription drug prices. Bloomberg Law notes that the retooled reconciliation package would need the blessing of every Democratic senator before advancing. By including the drug-pricing proposal in their budget reconciliation package, Senate Democrats are aiming to pass the measure with a simple majority that wouldn’t rely on the votes of their Republican peers, the publication explained.

The Congressional Budget Office on Friday said the drug pricing plan would reduce the deficit by around $287.6 billion over 10 years.