DOSE OF REALITY: BIG PHARMA PUSHES FOR POLICY TO KEEP DRUG PRICES HIGH IN RECONCILIATION TAX BILL
Pharma-Backed ORPHAN Cures Provision Would Cost Seniors and Taxpayers $4.8 Billion
Big Pharma is at it again, working overtime to pass a policy that would cost seniors and taxpayers billions of dollars in higher prescription drug prices as a rider on the reconciliation tax bill being considered in Congress.
In the version of the legislation recently passed by the U.S. House, Big Pharma was able to successfully insert a provision based on a bill called “The Optimizing Research Progress Hope And New (ORPHAN) Cures Act.”
While purportedly meant to protect and foster pharmaceutical innovation, this misguided legislation would help brand name drug manufacturers keep prices high on a whole category of their products.
So, it’s little wonder a staggering 27 individual drug companies, as well as Big Pharma’s major trade groups, BIO and PhRMA, lobbied in support of the ORPHAN Cures Act in the first quarter of this year.
The nonpartisan Congressional Budget Office (CBO) estimates this pharma-backed policy would cost seniors and taxpayers a whopping $4.8 billion in higher prescription drug spending.
In November 2023, JAMA Network published an analysis, conducted by researchers affiliated with Harvard University and Brigham and Women’s Hospital, that found Medicare spending on multi-orphan drugs — those shielded under the ORPHAN Cures Act — was $108 billion from 2012 to 2021.
The analysis also identifies specific “high-spend” drugs with multiple orphan drug designations, along with the manufacturers of these products — those who may be most likely to benefit from keeping drug prices high in this category. Among those “high-spend” drugs are a number of brand name Big Pharma giants who also lobbied in support of the ORPHAN Cures Act policy in the first quarter of this year, including:
- AstraZeneca - Calquence
- Novartis - Exjade
- Amgen - Nplate
- Bristol-Myers Squibb - Pomalyst, Reblozyl and Sprycel
- Takeda - Velcade
Big Pharma routinely asserts research and development (R&D) costs justify out-of-control prescription drug prices and claims solutions to lower prices threaten innovation. These arguments simply don’t hold up to the facts—and are part of a Big Pharma strategy to maintain the status quo where they game the system to block competition and keep drug prices high.
Numerous studies from medical and academic experts, government analysts and nonprofit researchers have confirmed that Big Pharma’s egregious pricing practices have no connection to the cost of developing a new medication or improving a drug’s clinical value for patients.
A September 2022 JAMA Network Open analysis found “no association” between manufacturer drug prices and investments in R&D. An October 2022 JAMA Internal Medicine study found oncology treatments are “priced based predominantly on what the market will bear,” not effectiveness for patients. A 2021 report from the nonpartisan Congressional Budget Office (CBO) found, “When drug companies set the prices of a new drug, they do so to maximize future revenues net of manufacturing and distribution costs. A drug’s sunk R&D costs—that is, the costs already incurred in developing that drug—do not influence its price.”
Lawmakers should reject pharma-backed policies advancing this false innovation narrative designed to keep prescription drug prices high at the expense of seniors and taxpayers — and remove the ORPHAN Cures Act from the reconciliation tax bill.
Instead, Congress should advance bipartisan, market-based solutions to hold Big Pharma accountable for their egregious pricing practices and anti-competitive tactics, like abuse of the U.S. patent system, that keep drug prices high for the American people.
Read more on how Big Pharma’s innovation arguments don’t hold up to scrutiny HERE and HERE.
Read more on bipartisan, market-based solutions to hold Big Pharma accountable HERE.
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