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Swiss pharma industry fights lower drug prices in the US

The American subsidiaries of Swiss drug giants, Roche and Novartis, have actively participated in the lobbying of US Congress members over the proposal to lower drug prices in the US. Copyright 2017 The Associated Press. All Rights Reserved.

A proposed law currently under discussion in the United States Congress aims to lower prescription drug prices. But Big Pharma, including Swiss giants Roche and Novartis, are pulling out all the stops to lobby against the measure.

This content was published on May 24, 2021 - 10:11
Alexis Rapin, Montréal

The issue often sparks heated debate across the Atlantic. The cost of prescription drugs in the US is among the highest in the world, with many Americans regularly forced to bleed themselves dry just to pay their pharmaceutical bills. Written in 2019 and dusted off last April, draft legislation to reform the law is currently being discussed by Congress. It’s a move that has not gone unnoticed by Big Pharma, with the industry’s giants — including the Swiss — discretely trying to put an end to the measure.

The text, Lower Drug Costs Now Act (or H.R.3), would allow the federal health insurance programme, Medicare, to negotiate the price of drugs directly with pharmaceutical companies. According to some estimates, such a change would mean that in a country which is still badly affected by diabetes, the price of insulin, for example, could be reduced by as much as 75%. Last week, a coalition of 16 civil society organisations published an open letter calling on Congress to pass the law as soon as possible.

How does Medicare set drug prices now

Medicare is the national insurance programme for people 65 and older in the US. Part B of the programme covers doctor and outpatient services like diagnostic screenings. Part D of the programme provides prescription drug coverage through various optional private plans, which negotiate prices and discounts with individual drug companies.

Federal law currently prohibits the US government, specifically the Secretary of Health and Human Services, from getting involved in drug price negotiations between Part D plan sponsors and drug manufacturers. There have been several bills put forward to try to lower drug prices. Proponents of the latest bill believe that giving the US government the authority to negotiate will provide leverage to lower prices, especially in cases where there is only one manufacturer of a drug.

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The US is the only country where “some patients delay or forsake healthcare because of the cost of medicines. People skip doses or cut their pills in half”, says Matt McConnell, a researcher with Human Rights Watch, one of the signatories to the letter. “Congress now has a chance to help millions of people in the United States who are fighting to get vital medicines.”

Roche and Novartis: spending millions

Not everyone in Washington is happy with the draft legislation. Since it was first introduced in 2019, the Lower Drug Costs Now Act has led to intense lobbying by the pharmaceutical industry on members of Congress. The American subsidiaries of Swiss drug giants, Roche and Novartis, have actively participated in this offensive.

According to data collected by the Center for Responsive Politics, the two Swiss companies spent $3.13 million (CHF2.81 million) and $2.17 million on lobbying in Washington during the first trimester of 2021. Although the money in question was spent on different issues, the Lower Drug Costs Now Act features heavily in the mandatory declarations filed by the companies. Also on the list, is the Lower Costs, More Cures Act, the counter-project backed by the Republican Party.

It’s not the first time that the two Swiss pharmaceutical firms have mobilised against the draft bill: between 2019 and 2020, Roche made 44 declarations of lobbying in relation to the Lower Drug Costs Now Act, and Novartis 13.

Swiss drugs: ‘best-sellers’ in the US

The sums at stake for Big Pharma are colossal. In 2020, the pharmaceutical divisions of Roche and Novartis recorded sales of CHF23.6 billion and CHF14.3 billion (53% and 36% of their business, respectively) in the American market alone.

The Congressional Budget Office estimates that the US government could save $456 billion over 10 years if Medicare is allowed to directly negotiate the price of drugs with manufacturers. Such a move would have a serious impact on the Swiss pharma companies’ bottom line.

As an example, in 2019, Roche’s Rituximab (a treatment for lymphoma and polyarthritis) was the 12th best-selling drug and the second most marketed by the Basel behemoth. It was also the fourth largest contributor to costs on Medicare’s Part B programme, with the federal government spending $1.73 billion on the drug. In the same year, Roche’s bestseller Avastin (a treatment against certain cancers) cost the US Treasury $1.03 billion.

Well-placed campaign donations

In its crusade against lower drug prices, lobbying is not the only weapon used by Big Pharma. The sector is also one of the biggest sources of political donations in the US.

“They showered more than $500 million on candidates during the 2020 elections,” noted Max Richtman, president of the National Committee to Preserve Social Security and Medicare, in a recent editorial. “No doubt, too many lawmakers are influenced by those donations and remain reluctant to challenge the industry.”

In May, ten Democrats in the House of Representatives shocked many when they signalled their opposition to the Lower Drug Costs Now Act, thus taking a position against that of their own party. Unsurprisingly, most of them count large pharmaceutical companies on their list of donors, including Merck, Pfizer and Johnson & Johnson.

The Swiss giants are also well represented according to data from the Center for Responsive Politics. Scott Peters, a congressman from California and one of the Democrats opposing the law, received $7,500 in donations from Novartis and $7,000 from Roche for his re-election campaign in 2020. Kurt Schrader and Tony Cardenas, two other Democratic defectors representing Oregon and California, received $8,500 and $5,000 from Roche last year.

This money appears to be a good investment. The future of the Lower Drug Costs Now Act is now uncertain: the ten defections correspond exactly to the Democrats’ thin majority in the House of Representatives. American patients may have to wait longer for a cure to the soaring cost of medicines. 

What’s the sticking point in the debate?

Both Democrats and Republicans agree that drug prices need to be lowered but don't agree on how. The bill, which was put forward by Democratic Congresswoman Nancy Pelosi, has support among left-leaning Democrats but some experts argue it may need to be watered down to bring on board moderates and some Republicans.

The pharma industry isn’t keen to see drug prices lowered but also worries the bill could shift its negotiating position overall. The bill proposes that prices take into account research and development costs, average prices in a basket of other countries, among other factors that would require more transparency on the part of the industry, The bill also wants penalties for companies that don't comply with the negotiating process.

Opponents of the bill argue that government involvement in price negotiations could dampen incentives for companies to invest in R&D.

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Additional background provided by Jessica Davis Plüss

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