BioUtah Joins State BIOs in Opposing Drug Price Controls
July 21, 2022
Senate Democrats are inching closer to a vote on a revived “Build Back Better” package, largely focused on drug pricing. The package would give Medicare the authority to negotiate drug prices and impose inflation rebates. The negotiation process, in practice, would function more like government price controls since drug manufacturers deemed non-compliant with the requirements of the negotiation program would face stiff penalties, including an excise tax reaching 95% of the drug’s sales.
BioUtah has joined other state BIO associations in signing a letter to Congress expressing our concerns. We also continue to express our concerns to Utah’s congressional delegation. We are grateful for their support in opposing these misguided policies.
Independent studies have said that far fewer new drugs would come to market as a result of the proposal. The Congressional Budget Office conservatively estimates that 15 fewer new medicines would enter the market over the next 30 years. The venture capital community has also sounded the alarm, noting that these drug pricing policies would do little to lower out-of-pocket costs, but would drastically reduce R&D and stifle investment in pioneering biotechs, with serious implications for innovation and patient care.
Notably, the package fails to address the practices of pharmacy benefit managers that drive drug costs higher and removes a $35 co-pay cap on insulin that was part of an earlier version of the legislation. Senate leadership plan to move the measure under the “reconciliation” process, which would allow for passage with a simple filibuster-proof majority.
The Senate parliamentarian must still sign off on the drug pricing provisions to ensure compliance with reconciliation rules. Under reconciliation, provisions must have a direct impact on government spending or tax revenue. In addition to the drug pricing piece, the package includes a two-year extension of enhanced federal subsidies for “Affordable Care Act” coverage, which also requires parliamentarian approval.
View Drug Pricing Summary HERE.
View Legislative Text HERE.