Big pharma seeks to change its reputation amid drug pricing crackdown

The pharmaceutical industry has historically wielded its immense influence in Washington, D.C., to block adverse legislation. Now, as Congress and the White House pursue measures to lower drug costs with a gusto not seen in years, the sector’s top advocacy group is trying to change its reputation.

Just a mention of the drug industry on Capitol Hill elicits intense emotions. It’s a sector lawmaker’s love to hate, and even the perception that pharmaceutical companies could benefit from a legislative proposal can be a deathblow to the effort.

Take the update to the North American Free Trade Agreement, a sweeping deal between the U.S., Canada and Mexico that, among other things, addresses long-standing labor complaints from Democrats and sets a precedent of strong U.S. intellectual property protections that advocates say will serve as a foundation for future trade agreements.

Tucked into the United States–Mexico–Canada Agreement (USMCA), however, is a provision to extend exclusivity rights for certain drugs to 10 years. That measure now poses such a threat to congressional approval of the overall agreement that the United States Trade Representative recently issued a statement claiming that nothing in the proposal would lead to higher treatment costs for patients.

The Pharmaceutical Research and Manufacturers of America, the industry’s main lobbying group, and its CEO, Steve Ubl, are well aware of the perception and are working to change it, starting with a shift in the group’s infamous heavy fisted approach to advocacy. 

“PhRMA’s been a very effective advocacy organization, very well known and adept at defeating bad policy ideas, but the muscle around advocating for new ideas is less well developed,” Ubl told FOX Business. “One of the things I really wanted to bring to the organization is a more proactive approach, where we are bringing pragmatic, pro-consumer policies to the table.”

It’s not the organization’s first attempt to improve its reputation – and likely won’t be its last. Past CEOs John Castellani and former Rep. Billy Tauzin, R-La., also touted PhRMA’s willingness to tackle big policy issues and engage in a healthy debate.

"It's a very powerful lobbying group when I was there and it still is. And it has to be because of some of the enormous difficulty that [the industry] faces," Tauzin said. "The industry has to have the help, not the antagonism, of policymakers."

The difference this time, however, is the group doesn’t have much of a choice.

The Trump administration is advancing its own slate of proposals intended to curb the rising price of drugs, some that the industry is vehemently opposed to. Meanwhile, top lawmakers are crafting legislative packages that will address pharmaceutical costs. Even House Speaker Nancy Pelosi, D-Calif., and the White House have held initial discussions on drug pricing legislation. 

“We are likely to see -- whether it’s administrative or legislative -- some form of action on drug pricing and we want to make sure it’s the right kind of change,” Ubl said. “The best way to do that is to really drive forward on better ideas."

The industry already has one failure under its belt. Tucked into last year’s spending deal, Congress included a provision to adjust the so-called “donut hole” to require drug companies to pay billions of dollars more into Medicare.

Sources say the inclusion took PhRMA by surprise, though it’s not atypical for lawmakers to look to different sectors to offset higher federal spending. Regardless, it spurred an intense lobbying effort to try to overturn the measure, one that eventually failed and left PhRMA with its first major advocacy defeat in decades.

It was another sign the industry needed to change its approach. And with a revamped board of directors – as well as one of, if not, the biggest financial war chest at its disposal – PhRMA is pushing what it calls “concrete solutions” to address a complex drug pricing system that includes not only pharmaceutical companies, but middleman pharmacy benefit managers, distributors, insurers and hospitals.

“We do have this enlightened group of board leadership that cares about the industry, not only today but what it’s going to look like 10 years from now,” Ubl said. “They are increasingly willing to lean into these conversations and want to change the perception of the organization -- that we again are coming to the table and bringing good ideas and solutions.”

The industry still has its nonstarters, including a proposal from the Trump administration to tie federal reimbursement for drugs to international pricing and a perennial idea to allow U.S. consumers to import treatments from abroad.

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But it has shown a willingness to compromise.

For years, lawmakers have pushed for legislation to address a controversial practice by pharmaceutical companies to restrict access to the samples needed for generic firms to create copycat treatments. Known as the CREATES Act, it was routinely pitched as a possible way to pay for related health care legislation only to be battled down by PhRMA and its army of lobbyists.

In 2018, the group worked with the Association for Accessible Medicines to craft a compromise bill. As congressional attention once again turns to the measure, however, the battle between the two sides has returned.

There’s been an election and generic association is reverting back to the original version of the legislation,” Ubl said. “Ultimately we think that the compromise is going to be durable because the changes that we were seeking…[are] not only important to us, but important to a large number of policymakers.”