DOSE OF REALITY: REPORT FINDS BIG PHARMA RIDER IN TAX LAW LIKELY TO COST SENIORS AND TAXPAYERS FAR MORE THAN PREVIOUSLY ESTIMATED
The Wall Street Journal Finds Pharma-Backed Provision Likely to Enable Big Drug Companies to Keep Prices High on Blockbuster Products Not Included in Original CBO Analysis
In case you missed it, The Wall Street Journal reported this week that a Big Pharma-supported policy, included in recently passed tax legislation, is likely to cost seniors and taxpayers far more than previously estimated.
Big Pharma’s rider in the package was 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.
The nonpartisan Congressional Budget Office (CBO) previously estimated this pharma-backed policy would cost seniors and taxpayers $4.8 billion in higher prescription drug spending.
But according to The Wall Street Journal, “The true tally of the new provisions could be far higher because CBO missed certain drugs such as Keytruda. The office plans to re-evaluate its analysis.”
Keytruda, which generated $8 billion in sales for its manufacturer Merck in the second quarter of this year alone, provides a case study in Big Pharma’s egregious pricing and anti-competitive practices. Already patent-protected in the U.S. until 2028, Merck is working to further extend monopoly pricing and undermine competition from more affordable alternatives beyond 2028, by seeking a new formulation and additional patents. At the J.P. Morgan Healthcare Conference in January 2025, Merck CEO Rob Davis said the brand name drug company is “moving up plans to file for approval and launch a subcutaneous version of Keytruda by the end of 2025.”
According to research from I-MAK, Merck has filed for 129 patent applications on Keytruda – more than half of which were filed after the drug’s initial approval by the U.S. Food and Drug Administration (FDA). The Big Pharma company has been granted 53 patents on this one drug. I-MAK estimates that Americans will spend at least $137 billion on Keytruda while the drug faces no competition due to its extended exclusivity that already totals more than eight years — without reflecting the added impact of the Big Pharma giant’s new patent strategy.
The Journal also identifies Johnson and Johnson product “Darzalex, a melanoma treatment, estimated to have had $5.6 billion in gross Medicare spending last year… Bristol-Myers Squibb’s cancer drugs Opdivo and Yervoy, which are estimated to have cost Medicare $4.7 billion and $993 million, respectively, in 2024… [and] AbbVie’s blood-cancer pill Venclexta, estimated to have had $814 million in gross Medicare spending in 2024,” as additional blockbuster brand name medications that would become exempt from solutions designed to lower drug prices for seniors and taxpayers under the provisions.
So, it’s no wonder Big Pharma was working overtime to add this rider into the recently passed package, while the full extent of its cost wasn’t yet fully known.
“The drug industry had long been pushing to include the provisions in the new law,” The Journal reports. “Dozens of companies, including Merck and AstraZeneca, as well as industry groups such as the Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization, lobbied lawmakers on the provisions in the first half of the year, according to data from OpenSecrets.org, a nonprofit that tracks lobbying and campaign finance.”
As the full impact of Big Pharma's loophole for high-priced blockbuster drugs comes to light, Congress should act to protect seniors and taxpayers from billions of dollars in higher prescription drug prices by repealing these harmful provisions.
Read the full report in The Wall Street Journal HERE.
Read more on the pharma-backed ORPHAN Cures Act HERE.
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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