This month policies aimed at lowering drug prices are back on the table. They were glaringly missing from President Biden’s framework unveiled a few weeks ago of the $1.75 trillion legislative package currently under consideration. But, last week, the Democrats reached a deal. It’s noticeably less ambitious than earlier Democratic proposals, but still represents a historic shift in how drug pricing is approached in the United States.

Ultimately, it hits on Democrats' main pillars of drug price reform and will: 

  • Allow Medicare to negotiate the prices of some drugs, once they are no longer in the exclusivity period
  • Cap how much drugmakers can hike prices in both Medicare and the commercial market and add penalties for price increases greater than inflation
  • Significantly reduce out-of-pocket costs for Medicare beneficiaries

Strong criticism echoes innovation concerns

  • PhRMA put out a statement torching the agreement, “If passed, it will upend the same innovative ecosystem that brought us lifesaving vaccines and therapies to combat COVID-19. Under the guise of ‘negotiation,’ it gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments.”
  • Similarly, the Association for Accessible Medicines (AAM) and its Biosimilar Council, which represents generic manufacturers, also released a critical statement, saying: “Patient access to more affordable generic and biosimilar medicines would be threatened under the policies currently under consideration in Congress. Competition from lower-cost generics and biosimilars has successfully led to decades of savings for patients.”

What happens next

  • The two-page outline released last week is not legislative text. The devil will be in the details as the Democrats flesh out the exact language. However, we don’t expect the main provisions to change much.
  • Reminder that the Democrats are using a special budget legislative vehicle called the “Reconciliation Process” that will let them pass this legislation without any support from Republicans. However, the room for error is minimal. The Democrats can’t afford to lose any of their members’ votes in the Senate (the chamber is split 50-50) and can only lose a few votes in the House. 
  • Last week’s election results and losses in Virginia are going to further fuel the pressure on Democrats to pass this legislation in the hopes of stymying defeat in next year’s midterm elections.

What this means for life sciences companies 

These policy proposals show why it is imperative – now more than ever – for manufacturers to develop and continue refining the value story for their products. More specifically:

  • If a company has made any promises on price increase limits, they will need to rethink their approach as caps are introduced for certain products. 
  • For companies that have pricing and access philosophies, those need to be revisited in the context of the new rules and consider whether they are indeed meaningful now.
  • For companies with therapies at the cusp of approval they need to consider pricing and access in this new context—and rethink their commercial access programs accordingly. 
  • Companies that want to push the envelope may want to consider transparency measures now and not wait until they are required to do so. If they are already trailblazing on this front, they may want to subtly remind stakeholders that they have always been championing patient access and price transparency. 

Don’t hesitate to reach out to the Syneos Reputation & Risk Management (RRM) team. To view the current key provisions of the proposal, please click here.

About the Author:

Aneeb is part of the Syneos Health Communications Reputation and Risk Management Practice, where he helps clients navigate the impact of public policy on corporate reputation and business decisions. He has a background in politics and healthcare policy and brings vast experience working on global pharma value and access campaigns.