The Lever - Big Pharma’s Signal To Joe Manchin

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In the first two years of the Biden presidency, Sen. Joe Manchin (D-W.Va.) has become one of big business’ favorite lawmakers, thanks to the way he stalled and ultimately killed Democrats’ Build Back Better bill, a health care and climate spending package that included the party’s signature drug pricing measure.

Now, with Manchin signaling he could support a new compromise budget bill that includes drug pricing reforms, Big Pharma isn’t taking any chances — and so it has started ramping up advertising pressure in his state. The industry is likely hoping for a repeat of Manchin’s habit of signaling support for popular initiatives like a billionaire tax, and then quickly backing down the moment moneyed interests raise objections.

Speaking to the world’s financial elites at the World Economic Forum in Davos, Switzerland, on Monday, Manchin said Congress still has “an opportunity” to pass meaningful legislation before the midterm elections — including on prescription drug prices. The statement was significant, because Manchin has long asserted that he supports some measures to reduce medicine prices.

Fearing legislative progress, a nonprofit called the Alliance for Patient Access recently started running ads in the Washington area and all over West Virginia warning that Congress is debating legislation that would “hurt innovation” and prevent companies from developing new treatments. The Alliance for Patient Access website makes clear the organization is funded by the pharmaceutical industry. The alliance published a list of its associate members and supporters in late 2020, which names the powerful drug lobby Pharmaceutical Research and Manufacturers of America (PhRMA) as well as three dozen drugmakers.

The ads feature a woman named Katie who says she has chronic migraine disease.

“Treatments have come a long way, so the possibility of living without migraine gives me hope,” Katie says in the ad. “But Washington is considering walls that would hurt innovation. Please don’t let this happen. Innovation in medicine needs to keep going so that I keep having hope. To find new treatments for tomorrow, we can’t let Congress take away our hope today.”

Pharmaceutical companies AbbVie and Lundbeck are members of the Alliance for Patient Access and manufacture drugs used to prevent migraines.

Ads Belied By Federal Data

The ads’ central assertion that limiting drug prices would fundamentally stifle research and development is wildly false: Last year, the Congressional Budget Office found that even if profits on top drugs decreased by 15 to 25 percent, there would only be “a 0.5 percent average annual reduction in the number of new drugs entering the market in the first decade.”

The reason for such a small decline? The federal government heavily subsidizes research on nearly every drug that ultimately gets approved for sale in the U.S.

In truth, the drug pricing measure being debated in Washington does not pose any real threat to the industry: Democrats substantially watered down their proposal last year, so that it would cost pharmaceutical companies far less money and only allow Medicare to negotiate prices on a handful of older drugs each year.

But drugmakers don’t want Congress to set the precedent of allowing the government to negotiate any drug prices, like most other high-income countries do, since that power could be expanded further down the road. They also don’t want to lose any of their outlandish profits — which is why the industry is now pummeling West Virginia with TV ads.

“The law to prohibit Medicare from using its buying power to negotiate lower drug prices was passed by the Republican Congress way back in 2003,” Craig Holman, an ethics lobbyist at Public Citizen, told The Lever. “The law not only prohibited Medicare from negotiating lower drug prices, it also prohibited the importing of cheaper drugs from Canada and other countries. It was a dream come true for the drug industry. Only now, 20 years later, is Congress debating repealing that disastrous legislative mistake. Even conservatives like Sen. Manchin now understand it was a mistake. But the pharmaceutical industry will fight back hard.”

The Insulin Angle

Though Democrats’ bill has been watered down, the House recently passed a $35 cap on the co-pays that people with insurance are expected to pay for insulin each month — and that provision remains part of the Build Back Better framework still being considered in Congress.

The House version of Build Back Better that passed in November also specifically listed insulin products as eligible for government price negotiation.

Reducing the price of insulin could threaten the profits of Eli Lilly, Novo Nordisk, and Sanofi, which control the U.S. insulin market. Those companies have each jacked up insulin analog prices more than 400 percent since introducing their products to the point where the average U.S. price for a dose of insulin is triple what it costs in other high-income countries.

All three companies are members of the Alliance for Patient Access — and have increased their lobbying spending amid the push for lower insulin prices.

“The Alliance for Patient Access ad campaign is the very worst of a wealthy business interest running deceptive advertising designed to trick the public into doing their bidding for the industry,” said Holman.

The Alliance for Patient Access’ West Virginia ad campaign follows a similar effort by a pharma front group called the Coalition to Protect Access, which ran ads claiming that Democrats’ drug pricing measure “would harm our ability to fight pandemics” — despite the fact that the U.S. government poured tens of billions of dollars into efforts to develop COVID-19 vaccines and treatments.

Although his daughter previously ran a pharmaceutical company infamous for hiking the price of EpiPens, Manchin has consistently expressed support for allowing the government to negotiate drug prices.

Late last month, Manchin told Bloomberg News that he and Senate Majority Leader Chuck Schumer (D-N.Y.) had started discussing a new budget bill to try to reduce inflation. According to Bloomberg, Manchin “said that it would make sense to include cuts to prescription drug costs in the package.”

Axios reported last week that the conservative Democrat has been pushing “to cobble together a compromise package on climate, energy independence, deficit reduction and prescription drug reform.”

The West Virginia ads are likely aimed at trying to convince Manchin to back down — which he often does the moment a powerful lobby starts speaking up.

In October last year, during conversations about funding for Democrats’ Build Back Better legislation, Manchin was reported to be on board with a White House proposal to tax billionaires’ investment income before he came out against it. Around the same time, CNBC reported that “billionaire investor Nelson Peltz said he talks to Sen. Joe Manchin every week.”

Two months later, the Washington Post reported that Manchin “told the White House last week that he would support some version of a tax targeting billionaire wealth.” By March, Manchin was shutting down a new proposal from Biden to place a 20 percent minimum tax on the unrealized capital gains of households worth more than $100 million.

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