Tag Archives: Pharmaceutical Industry Lobby

Health Care Industry Gears Up to Fight ‘Medicare for All’

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http://www.thefiscaltimes.com/2018/08/10/Health-Care-Industry-Gears-Fight-Medicare-All

In anticipation of a “blue wave” election that brings more Democrats to Congress, the insurance and drug industries are gearing up to push back on the idea of a single-payer health care system.

The Hill’s Peter Sullivan reports that health-care industry forces have teamed up to form the Partnership for America’s Health Care Future, “which lobbyists say could run advertisements against single-payer plans and promote studies to undermine the idea.” The health care groups in the partnership, formed in June, include America’s Health Insurance Plans (AHIP), the Pharmaceutical Research and Manufacturers of America (PhRMA), the American Medical Association and the Federation of American Hospitals.

The idea of a single-payer or “Medicare for all” health-care system has gained momentum among Democrats, even as significant questions remain about how such a massive overhaul might be implemented and how to pay for it. “Industry groups are worried that support for single-payer is quickly becoming the default position among Democrats, and they want to push back and strengthen ties to more centrist members of the party to promote alternatives,” Sullivan writes.

The groups’ concern is more about the prospects of a Democratic single-payer platform in 2020, given that a host of the party’s potential presidential candidates have backed Bernie Sanders’ “Medicare for all” bill. “Every one of those organizations that’s in that group will look at Bernie Sanders’s single-payer and see massive losses of money,” John McDonough, a former Democratic Senate staffer who worked on the Affordable Care Act and is now at Harvard’s T.H. Chan School of Public Health, told The Hill.

The industry’s budding campaign could pose a formidable political and public relations challenge to proponents of a single-payer system. “Leaving aside whether single payer is good policy or not,” the Kaiser Family Foundation’s Larry Levitt tweeted, “it seems like the idea is going to eventually need some powerful institutional allies from somewhere to advance.”

 

 

Drug Trade Group Quietly Spends ‘Dark Money’ To Sway Policy And Voters

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https://khn.org/news/drug-trade-group-quietly-spends-dark-money-to-sway-policy-and-voters/

 

In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry’s top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaignbacking passage of the law.

But last year, when Republicans mounted an aggressive effort to repeal and replace the law, the group made a point of staying outside the fray.

“We’ve not taken a position,” said Stephen Ubl, head of the organization, the Pharmaceutical Research and Manufacturers of America, known as PhRMA, in a March 2017 interview.

That stance, however, was at odds with its financial support of another group, the American Action Network, which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination.

“Urge him to repeal and replace the Affordable Care Act now,” one ad running in early 2017 advised viewers to tell their congressman. That and similar material (including robocalls) paid for by the American Action Network ran numerous times last year in 75 congressional districts.

PhRMA was one of AAN’s biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade.

But there was no way the public could have known at the time about PhRMA’s support of AAN or the identity of other deep-pocketed financiers behind the group.

Unlike groups receiving its funds, PhRMA and similar nonprofits must report the grants in their own filings to the Internal Revenue Service. But the disclosures don’t occur until months or sometimes more than a year after the donation.

The conservative-leaning AAN has become one of the most prominent nonprofits for funneling “dark money” — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court’s Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS.

(It’s impossible to know from public records whether PhRMA donated before or after President Donald Trump’s victory, which made repealing the health law a substantial possibility. In any case, most donations to dark-money groups are not earmarked for a particular program.)

Generally speaking, dark-money groups are politically active organizations, often nonprofits, that are not required to disclose identities of their donors. Under IRS regulations, donors may fund a nonprofit group such as AAN, which is allowed to engage in political activities and is not required to reveal its funding sources.

Dark-money groups are often chartered under Section 501(c)(4) of the tax law, which grants tax exemption to “social welfare organizations.” For those seeking to influence politics but stay in the background, 501(c)(4) designations offer two big advantages: tax exemption and no requirement to disclose donors.

Against the backdrop of high drug prices and its heaviest political expenditures in years, the pharmaceutical industry is directing substantial resources through AAN and other such groups that hide the identity of their donors and have few if any limits on fundraising.

“PhRMA has always been very aggressive and very effective in their influence efforts,” said Michael Beckel, research manager at Issue One, a nonprofit devoted to campaign-finance transparency. “That includes using these new, dark-money vehicles to influence policy and elections.”

PhRMA’s $6.1 million, unrestricted donation to AAN was its single-biggest grant in 2016, dwarfing its $130,000 contribution to the same group the year before. Closely associated with House Republicans — AAN has a former Republican senator and two former Republican House members on its board — the group backed the failed GOP health bill intended to replace the Affordable Care Act. It also supported the successful Tax Cuts and Jobs Act of 2017, which reduced corporate taxes by hundreds of billions of dollars over a decade.

So far in this election cycle, AAN has given more than $19 million to the Congressional Leadership Fund, a Republican super PAC with which it shares an address and staff, according to the Center for Responsive Politics. The fund recently ran ads opposing Democratic candidates in high-profile special congressional elections in Georgia and Pennsylvania.

PhRMA disputes the suggestion that it backs particular actions by the recipients of its donations. “PhRMA engages with groups and organizations that have a wide array of health care opinions and policy priorities,” said its spokesman, Robert Zirkelbach. “It is inaccurate and would be inappropriate for you to attribute those grants to a specific campaign.”

AAN declined several requests for comment.

Including AAN, PhRMA gave nearly $10 million in 2016 to politically active groups that don’t have to disclose donors, its most recent filing with the IRS shows. By contrast, PhRMA and its political action committee, or PAC, made only about $1 million in comparatively transparent political donations in 2015 and 2016 that were disclosed to regulators and reported by the Center for Responsive Politics.

PhRMA’s 2016 political activities included support for the Republican National Convention. Rather than directly support the Cleveland convention, which several companies pulled out of after it became clear that Donald Trump was going to be the presidential nominee, PhRMA routed $150,000 through limited liability companies with names like Convention Services 2016 and Friends of the House 2016.

Like 501(c)(4)s, LLCs do not have to disclose their donors. PhRMA’s support was revealed in IRS filings more than a year later. (Donations by PhRMA and other groups to Friends of the House, which financed a luxury lounge for convention dignitaries, were first reported by the Center for Public Integrity last fall.)

PhRMA’s surge in donations to AAN coincides with the arrival of Ubl, who took over as president and CEO in 2015 and has long-standing ties to Norm Coleman, a former U.S. senator from Minnesota who is now AAN’s chairman. Ubl once ran the lobby for makers of knee implants, heart stents and other medical devices, one of whose most powerful members, Medtronic, is based in Minneapolis.

Dues paid by member drug companies rose by 50 percent after he got there. PhRMA’s total revenue increased by nearly a fourth in 2016, according to IRS filings.

PhRMA’s 2016 dark-money contributions included $150,000 to Americans for Prosperity, a conservative group associated with billionaires Charles and David Koch. Their group has already signaled it will be active in November’s elections, running attack ads against Sen. Jon Tester, a vulnerable Montana Democrat, for not supporting ACA repeal.

PhRMA also gave $50,000 to Americans for Tax Reform, run by conservative anti-tax activist Grover Norquist.

PhRMA and other trade associations donate to such groups “to avoid attracting attention” amid the political fray, said Bruce Freed, president of the Center for Political Accountability, which seeks to shed light on corporate political spending. Nevertheless “they’re achieving their goals by giving money to these folks and helping elect members that are going to be in support of them.”

Mostly smaller amounts went to centrist and liberal groups. Center Forward, which claims to seek bipartisan, common ground on drug policy and other issues, got $300,000 directly from PhRMA and another $179,000 from a PhRMA-backed group called the Campaign for Medical Discovery, according to tax filings.

Zirkelbach disputed the notion that PhRMA donations to AAN and other groups were intended to achieve specific goals, saying, “We seek to work with organizations we agree with as well as those where we have disagreements on public policy issues.”

Much of the work by PhRMA-linked, dark-money groups touches health policy and harmonizes with PhRMA’s positions.

During debates over the tax overhaul, Center Forward worked to preserve a tax credit for researching rare-disease medicines known as orphan drugs. PhRMA took a similar stance, encouraging Congress “to maintain incentives” for rare-disease drugs.

AAN, which collected total contributions and grants of $14.6 million for fiscal 2016, launched a $2.6 million mass-mailing and ad campaign against letting Medicare lower drug prices through negotiations. PhRMA supported that stance, telling Healthline that such a measure could jeopardize seniors’ access to medicine and discourage companies from developing drugs.

Americans for Tax Reform ran similar ads in local markets opposing “price controls” on prescription drugs.

PhRMA’s dark-money allies push its agenda without disclosing its role, critics say.

PhRMA is “spending millions of dollars on politics every cycle, and they’re splitting it up between the state and federal level,” said Robert Maguire, political nonprofits investigator for the Center for Responsive Politics, which tracks political donations. “They’re just not running the political ads themselves,” which keeps their name off the product, he said.

A group called Caregiver Voices United, which got $720,000 from PhRMA in 2016, backed a secret effort to generate letters opposing a drug-transparency bill in Oregon. The campaign surfaced when an employee leaked phone-script documents to a lawmaker, as reported in February by The Register-Guard newspaper in Eugene.

Caregiver Voices United is “not influenced” by PhRMA or any other outside group, said John Schall, its president.

Dark-money groups received pharmaceutical industry money from individual companies as well, not just the PhRMA trade organization.

In 2016, Amgen gave $7,500 to Third Way, a center-left group that supports reimbursement for drugs and medical devices based on their results, according to the Center for Political Accountability. Johnson & Johnson gave $35,000 that year to the Republican Main Street Partnership, a 501(c)(4) that describes itself as a coalition of lawmakers committed to “conservative, pragmatic government,” the CPA data show.

But CPA’s research also reveals that many pharmaceutical companies don’t disclose donations made to 501(c)(4) organizations, nor are they legally required to.

Corporations “could dump millions into one of these (c)(4)s and nobody would ever know where it came from,” said Steven Billet, a former AT&T lobbyist who teaches PAC management at George Washington University.

 

How drug companies are beating Trump at his own game

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https://www.politico.com/story/2018/08/03/trump-drug-prices-companies-721145

People pass the Pfizer headquarters in New York. |Getty Images

 

Recent price freezes and rollbacks are symbolic measures with little lasting impact.

A July tweet from President Donald Trump sent panic through the C-suites of some of the world’s biggest drug companies, prompting Pfizer and nine other companies to roll back or freeze prices.

But there’s less to those announcements than meets the eye. The gestures turned out to be largely symbolic — efforts to beat Trump at his own game by giving him headlines he wants without making substantive changes in how they do business.

The token concessions are “a calculated risk,” said one drug lobbyist. “Take these nothing-burger steps and give the administration things they can take credit for.”

Of the few companies that actually cut prices, for instance, most targeted old products that no longer produce much revenue — such as Merck’s 60 percent discount to a hepatitis C medicine that had no U.S. revenues in the first quarter.

Others volunteered to halt price increases for six months — in some cases, just weeks after announcing what is normally their last price hike for the year.

“A lot of this shit is meaningless to satisfy Trump,” said another drug lobbyist.

The industry’s deft response to Trump’s tweet shaming has also become a test of whether his administration is serious about following up with an aggressive crackdown on the companies or will simply declare victory based on token measures and move on.

“I think right now it’s a lot of noise, not a lot of substantial impact to the companies,” said Les Funtleyder, a health care portfolio manager at E Squared Asset Management, which owns shares in Pfizer. The prospect for meaningful change “is out there … but that will take motivation on the part of regulators and policymakers.”

Analysts are in broad agreement that the spate of recent concessions won’t hurt bottom lines, or rein in drug prices beyond this six-month period, because many companies already increased prices this year — in some cases, just weeks before publicly pledging to freeze them for the rest of 2018.

“There’s the glass-half-full and glass-half-empty interpretation,” said Walid Gellad, director of the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh. “Glass half full says we have never before seen pharma promise not to raise prices anymore. So this is a step forward — including for patients. Glass half empty is that these are token measures — either on drugs few people use, or drugs that just had their price raised, and that prices will just go up next year.”

Either way, Gellad said, “this is not the kind of structural change we want in the market so that prices go down.”

Drug prices are a fixation for Trump, who rants about them in conversations with aides and advisers, according to people close to the president. He sees the issue as a political winner, especially among his conservative — and largely older — base, which relies heavily on prescription drugs. And after facing huge hurdles moving his legislative priorities through Congress, he sees this as something he can win on by using his executive authority.

That has put huge pressure on Health and Human Services Secretary Alex Azar, a former top official of Eli Lilly and Co.

“They talk three times a week, and they never have a conversation where drug pricing isn’t a topic,” said one person briefed on the conversations, adding that Trump has also interrupted Cabinet meetings to encourage Azar to brief the group on the latest developments.

But even as Azar implements his 44-page blueprint aimed at lowering prices, Trump has grown impatient with the glacial pace of rulemaking and arcane details of drug policy.

His outlet is Twitter, where he can marshal the rage of his millions of followers in an instant. White House aides say he sees his Pfizer tweet as a warning shot to other drug companies — part of a public “shaming” campaign designed to pressure companies to take voluntary steps to lower prices.

That strategy diverges sharply from what Azar is saying publicly — raising doubts about how serious the administration is about cracking down on drugmakers.

The HHS secretary’s rhetoric often targets pharmacy benefits managers — the obscure middlemen who manage the drug side of patients’ health insurance benefits — not drug companies. And targeting the middlemen is a play directly out of pharma’s strategy book — drug companies have long sought to pin patients’ frustration with rising costs on PBMs. HHS has also signaled it wants to overhaul a drug discount program for hospitals that could put money back in pharma’s pocket.

Pfizer CEO Ian Read himself praised the president’s blueprint on the company’s recent second-quarter earnings call, just a few weeks after Trump’s Pfizer tweet.

“I don’t think the administration is gunning for [pharma],” said Ronny Gal, a financial analyst at Sanford Bernstein. Everything they are doing right now is “scratching around the problem,” he said.

“You can tell by the way the stock has performed that investors aren’t too concerned,” Funtleyder said. “They figure, ‘OK, the pharma companies waved the white flag for now, so they’re out of the cross hairs.‘”

Meanwhile, HHS and drug industry officials have worked closely to show Trump they are getting results, administration and pharmaceutical industry sources tell POLITICO.

In private meetings with drug officials, HHS officials ask what steps they’ve taken that they might relay to Trump to keep the president satisfied, said drug company sources.

“They’re also like, ‘Hey, don’t be stupid. If you’re going to do something you feel like we can mutually take some credit for, let us know. … If you can get a good tweet out of it, don’t be an idiot. Let us know [ahead of time],’” said one person familiar with the conversations.

“They’ve said: ‘What would it take for you to lower prices?’” said another top drug industry official.

“There is a real fear that Trump only understands things very simplistically,” said a lobbyist for several drug companies. “So they want to keep tossing treats for him or he will go after blunt instruments,” like government drug price negotiations — steps neither the conservative leadership at HHS nor the drug industry want.

Observers both inside HHS and outside the administration see Azar’s drug pricing team as a buffer for the drug industry.

“To be candid, the secretary is pro-patient, pro-innovation and pro-competition and, quite frankly, really standing in between the industry and some faster ways to lower prices that some would say are not pro-competition,” said HHS’ John O’Brien, a senior adviser to Azar, at a drug cost event one day after Trump’s tweet attacking Pfizer.

Azar prefers the industry and HHS work to make change together, rather than it being adversarial, according to people familiar with HHS’ strategy.

He publicly touts industry price freezes and reversals “in part to show Trump they’re making progress, but also to show the industry that you get recognized for playing ball,” said a person familiar with the discussions.

The White House, meanwhile, was thrilled about the industry’s recent price freezes, even as officials acknowledged the companies’ announcements are only a first step — and promised what one official characterized as a “deluge” of drug price-related regulatory action in the coming months.

“Nothing about what they do or don’t do is going to really turn the tide in a major, major way on a voluntary basis,” the official said of the drug companies’ actions, promising that the administration will take aggressive action.

In the meantime, the White House isn’t ruling out more Twitter shaming.

“You’ll see continuing of the tweeting and announcing different actors doing good or bad things in the market,” the official said.

That will get particularly tricky for the industry come January, when drugmakers would typically take their biggest price increases of the coming year — and when their public concessions sunset.

“They can live with the changes that were made — but they can’t live with not raising prices forever,” Gal said. “It’s a noose they put their head into. In January, we will see what happens with that noose. Does it tighten or not?”

 

Some Drugmakers Are Canceling Price Hikes – but Not Because of Trump

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http://www.thefiscaltimes.com/2018/07/11/Some-Drugmakers-Are-Canceling-Price-Hikes-Not-Because-Trump

Pfizer may have decided to roll back drug price hikes after being criticized by President Trump, but Bloomberg reports that several other large drugmakers are canceling or reducing planned price increases, perhaps in part because of a new California drug pricing transparency law that requires them to provide at least 60 days’ notice of price increases greater than 16 percent during a two-year period.

“In the past three weeks, Novartis AG, Gilead Sciences Inc., Roche Holding AG and Novo Nordisk A/S sent notices to California health plans rescinding or reducing previously announced price hikes on at least 10 drugs,” Bloomberg’s Ben Elgin, Cynthia Koons and Robert Langreth write.

The law is being challenged in court by the industry, but manufacturers have been complying while the case plays out.

Still, one industry analyst tells Bloomberg that the California law won’t actually slow the rate of price hikes. “If what you are trying to do is limit price inflation, this is not the way to go about it,” said Richard Evans, an analyst at investment research firm SSR. “This is not going to change mainstream list price behavior at all.”

Evans says that the drugmakers involved are probably just “throwing up a smokescreen” to hide the details of their price increases from competitors and patients.

Why it matters: These early results from California’s law might look encouraging, but it’s still a far cry from structural reforms that will keep prices in check.

 

 

HHS proposes allowing some drug importation, but impact would be limited

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HHS proposes allowing some drug importation, but impact would be limited

Money pile and medicine pills representing medical expenses

Nevertheless, the proposed policy could take Martin Shkreli-like practices “out of the ballgame,” expert says.

Regulators could allow importation of certain drugs in an effort to keep prices down, under a proposal from the Department of Health and Human Services.

On Thursday, HHS Secretary Alex Azar requested that Food and Drug Administration Commissioner Scott Gottlieb create a working group to find how to safely import drugs from abroad in cases when their US-made marketed equivalents undergo dramatic price increases.

However, experts said the effect of such a policy on prices – if it passes – will be limited.

Azar pointed to the now infamous example of the toxoplasmosis drug Daraprim, whose price manufacturer Turing Pharmaceuticals increased from $13.50 per pill to $750 in 2015, drawing nationwide scorn for Turing and its CEO, Martin Shkreli. Shkreli was sentenced to seven years in prison in April following his August 2017 conviction on charges of securities fraud and conspiracy. Turing, which has since changed its name to Vyera Pharmaceuticals, is currently losing money, STAT reported, and shareholders will vote Friday on a proposal to change the name again, to Phoenixus.

Several political leaders have proposed allowing importation of drugs. In May, Republican Vermont Gov. Phil Scott signed a bill that would allow importation of drugs from Canada, though HHS must still certify the law. Independent Vermont Sen. Bernie Sanders also introduced a bill in the Senate, S. 469, The Affordable and Safe Prescription Drug Importation Act, that would allow the same, with cosponsorship from several Senate Democrats. The bill would wholesalers, pharmacies and individuals to import a range of medications.

However, the HHS proposal is more narrow, focusing specifically on drugs that have seen significant price increases. Gerard Anderson, professor of health policy and management at Johns Hopkins University, and several colleagues made a similar proposal in a paper published in JAMA in February 2016. Under their proposal, GlaxoSmithKline – the original manufacturer of Daraprim – would be able to import the drug from the United Kingdom, where it sells for less than $1 per tablet. The paper compared the proposal to FDA allowances for importation during shortages of critical medications.

Still, Anderson said in a phone interview that the HHS proposal will not likely have a broader spillover effect on drug prices, but will only affect the specific drugs that are included. “For a very narrow subset of medications, it could take the Martin Shkrelis out of the ballgame because these drugs are very inexpensive in other countries,” he said.

In addition to Turing, other companies that have become notorious for raising drug prices include Shkreli’s prior company, Retrophin, and Valeant Pharmaceuticals. Questcor Pharmaceuticals raised the price of Acthar Gel from $1,650 per vial to $23,269 in 2007, and the price has risen to $38,892 since Questcor’s 2014 acquisition by Mallinckrodt Pharmaceuticals. More recently, larger drug companies have also taken heat for smaller price increases. Pfizer backed down from a plan to raise the prices of about 100 of its medications after criticism from the Trump administration, while Novartis and Merck & Co. have pledged to limit price increases as well.

The government stipulating what constitutes a “dramatic price increase” could create a de facto price ceiling that drugmakers would stay under when changing their prices, said Lev Gerlovin, vice president at Boston-based consultancy Charles River Associates, in a phone interview. It’s hard to assess whether that would have a material effect on the industry, given that the ceiling may be greater than what most manufacturers already tend to do as a matter of course. However, while cautioning that he is not a Washington observer, Gerlovin said likely industry pushback citing patient safety concerns makes the proposal appear unlikely to pass.

 

 

4 Regulations That Would Terrify U.S. Drug Companies Ahead Of The 2018 Midterms

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https://www.forbes.com/sites/robertpearl/2018/07/16/drug-companies/#72ce13501e41

Image result for High Drug Prices

If you’re a powerful American drug company, then you’ve had a strange couple of months. In that time, you’ve experienced a rainbow of emotions: fear, relief and, now, confusion and anxiety.

The roller-coaster ride, as you recall, began in mid-May when President Trump stood alongside HHS Secretary Alex M. Azar, in the Rose Garden of the White House, in front of a sign reading “Lower Drug Prices for Americans.”

As the president approached the mic, you watched with bated breath, remembering Trump’s campaign promise to drive down prescription drug prices to below a penny on the dollar. You always knew that’d be impossible but, then again, you thought, is anything really impossible?

Things started off poorly that morning. Almost immediately, Trump began denouncing the actions of drug manufacturers who, he said, were contributing to a “broken system.” He then urged all U.S. pharma companies to drop their prices, before deriding pharmacy benefits managers (PBMs) as “middlemen” who are getting “very, very rich” off the same broken system as you.

But when his speech ended, relief washed over you. After all, President Trump made no mention of his previous promise to negotiate lower drug prices for seniors enrolled in Medicare. He didn’t revive his vow to allow the importation of prescription medications, either. He didn’t discuss the popular notion of shortening pharmaceutical patents, nor that idea about requiring drug-companies to justify the price of new medications.

Granted, all these promises would be incredibly difficult to legislate. And, like most drug companies, you know that most of these ideas wouldn’t severely damage your bottom line anyway. But had the president committed to even one of them in his Rose Garden speech, he would have sent a clear message that this is not business as usual.

Instead, you and your colleagues took solace in his words. By late afternoon, the nation’s pharmaceutical, biotech and PBM stocks were up, not down. In the following weeks, drug companies interpreted Trump’s comments the same way drag-racers look at a stop signs—as more of a request than a rule.

Now, in fairness, President Trump and Secretary Azar had no intention of revealing a final, comprehensive set of proposals, rules or regulations on May 11. They set their sights on Tuesday, July 16—the official deadline for interested parties to comment on Secretary Azar’s blueprint Q&A. That’s when the real policy-making is set to begin. And, until early this month, most of the drug industry had been bracing for incremental, not radical, change.

But on July 1, Pfizer learned that it’s not safe to wake a sleeping bear. Thinking they had a clear runway, Pfizer’s corporate executives went ahead and raised list prices on more than 100 prescription drugs.

He followed that Tweet with a phone call and, within 24 hours, Pfizer had rolled back its price increases. Just like that, Trump had the drug industry’s full attention.

It stands as a public relations win for Trump in the lead up to the 2018 midterm elections. With recent polls indicating that 22% to 30% of Americans say healthcare is their top voting issue, Trump and the Republican party are wise to appear tough on rising drug prices (even if Pfizer is merely deferring its price hikes until later in the year).

Uncertainty and confusion, once again, permeate the drug industry. If the polls are even remotely accurate at predicting voter behavior this November, Trump and his cabinet will have good reason to take action.

I personally hope they have the courage to do so.

Unfortunately, the ideas Trump and Azar presented in the Rose Garden won’t be enough. They aren’t going to flatten the rapid rate of drug-price inflation or dramatically impact future price escalation.

So, alongside the administration’s proposed ideas, I offer four alternative policies that could make a real difference:

Leading idea No. 1: Take out the “middlemen”

In his May 11 address, the president went after PBMs, those insurance-company intermediaries between drug manufacturers and patients. At present, consumers know nothing about the prices these intermediaries negotiate or the size of the rebates/kickbacks they keep for themselves. Revenue for PBMs is determined as a percentage of all Rx drugs sold, which means there’s virtually no incentive to drive prices lower or replace the high-margin, brand-name drugs on PBM formularies with new, lower-cost alternatives. Federal legislation could require PBMs to operate transparently and work to lower out-of-pocket costs and drug prices for patients. However, there are way too many “ifs” with this approach to expect major change on the horizon.

A more frightening proposition for drug makers: Imagine if the U.S. government negotiated drug prices for all 55.5 million Medicare patients and made those costs publicly available so that everyone knew what price was fair and reasonable. Nearly all other nations do this. Why not the United States? Besides, Medicare already establishes prices for participating hospitals and doctors. Why not do the same for drug prices?

Leading idea No. 2: Make other nations pay more

Whether it’s NATO spending or wall-building, President Trump expects other nations to pony up for American interests. Most nations have made a habit of saying no. Now, rather than negotiating on behalf of Medicare for lower-cost medications (particularly Part B), the president has encouraged citizens of other countries to pay more for their prescriptions and, thereby, contribute an increased share of funding to drug-company R&D. Health ministers in other nations haven’t made this high priority for their 2019 healthcare agendas. They likely won’t. Even if drug prices were to rise in other countries, would drug manufacturers pass that added revenue on to American patients? Or to their shareholders? History suggests it’s the latter.

A more frightening proposition for drug makers: Require drug companies to document all the R&D dollars they spend in bringing a product to market. Further, force them to quantify and compare their drug’s efficacy to other drugs on the market. If pharmaceutical companies want generous patent protections (for products that often determine whether a patient lives or dies), their pricing can’t be capricious or simply what the market will bear. Prices should relate either to: (a) the cost of the drug’s R&D or (b) the superior clinical effectiveness of the medication.

Leading idea No. 3: Put prices in Rx ads

This is one of the most interesting concepts to come out of Trump and Azar’s blueprint. That’s because such a policy would, at least in theory, make it impossible for drug makers to hide their prices. USDA regulations already require companies to disclose possible side-effects in ads. Imagine if the administration also stipulated that pharmaceutical manufacturers must disclose their prices in ad copy, as well. For now, it’s unclear which costs the drug makers would need to disclose, given that patients and purchasers pay very different amounts for the same medications. Already, drug companies are using coupons and rebates, what critics deem to be clever schemes, to lower the advertised price for patients while simultaneously raising what they charge insurers—who ultimately pass those costs back to purchasers and patients through higher premiums.

A more frightening proposition for drug makers: Limit what U.S. pharmaceutical companies can charge. Period. American drug makers should be required to pay a penalty if they charge Americans more than 120% for the same medication as the 10 wealthiest nations pay on average. It’d be the same thing that happens when baseball teams exceed the salary cap. And when comparable medications exist at lower prices, TV ads would need to disclose that fact to viewers, as well.

Leading idea No. 4: Speed up generic medication approvals

This idea is a step in the right direction. Unfortunately, the president didn’t explain why generics currently undergo such lengthy delays for approval. The biggest hurdle is not government regulations, but drug company tactics. For most patented prescriptions, the generic versions have exactly the same chemical structure, and therefore, the same efficacy. As such, once a generic exists, there’s little or no reason to purchase the more expensive product. Knowing this, makers of the brand-name version use legal maneuvers to extend their patent protections before driving generic competitors out of business with their pricing and marketing leverage.

A more frightening proposition for drug makers: The government needs to change patent laws to protect patients first. Medications fall into two classifications. There are the small-molecule ones that often are available over-the-counter. With these, the generic version’s chemical structure is identical to that of the brand-name version. There also are the biologicals, so named because they are produced by living cells and organisms. Insulin is one example. Increasingly, this latter class of drugs has the highest price. These chemicals are too complex to be copied exactly, which is why the generic equivalents are labeled “biosimilars.” The solution here is to focus on the most expensive, large-molecule biologics first. In so doing, the government should force manufacturers to hand over drug samples to biosimilar companies 18 months before their patents end. This will speed up the development of biosimilars and fast-track the approval of lower-cost (but equally efficacious) medications. For patients with diabetes, this could lower the cost of life-saving insulin by 50% or more. Recent research from Yale shows up to 1 in 4 people with diabetes are injecting less insulin than they should simply because of the cost.

A Realistic Glimpse Into The Future Of Drug Pricing

Today, the pharmaceutical industry enjoys powerful patent protections and, thereby, monopolistic control over pricing. The consequence is that Americans are paying exorbitant prices for patented medications. The simplest solution is to strike a legislative balance that allows (a) drug companies to invent (and invest in) the next generation of breakthrough medication while (b) allowing the American people to afford the medications they need to stay healthy.

For most of the 20th century, the pharmaceutical world stayed within those guardrails. But over the past decade, profits have been way out of line with R&D and investment. The time has come to restore balance and reasonableness, regardless of what the national drug lobby wants.

Later this week, Secretary Azar will receive feedback on the administration’s blueprint and will begin drafting potential cost-cutting regulations. I encourage him and President Trump to use their authority to make drugs more affordable.

I suspect the pharmaceutical industry believes it will be business as usual, despite the campaign rhetoric and another Rose Garden event this coming fall. I hope the Secretary and the president have the courage to prove them wrong. The health of the American people depends on it.

 

 

Reducing Drug Prices and Medicare’s Role: ‘It’s Complicated’

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Reducing Drug Prices and Medicare’s Role: ‘It’s Complicated

The White House Rose Garden was in full bloom when President Trump took the podium to announce that his administration was “launching the most sweeping action in history to lower the price of prescription drugs for the American people.”

He said: “It’s been a complicated process, but not too complicated.”

Thing is, it is pretty complicated and made more so by the admittedly tangled web of lobbyists knocking with dogged determination on lawmakers’ doors in pursuit of one thing: higher drug prices.

Their efforts appear to be working. In 2017, they spent almost $280 million in pursuit of their employers’ objectives. Another estimate puts the cost of drug lobbying at $2.3 billion from 2006 to 2016, and it’s clear that the industry also pays substantially to support candidates for both houses of Congress.

The President talked about his announcement being “the most sweeping action in history to lower the price of prescription drugs.” If you remember the presidential campaign, he promised to utilize Medicare’s gorilla purchasing power to negotiate directly to reduce prices. That all sounded very promising.

What Medicare Can and Can’t-Do

Medicare buys more drugs than anyone else, because it has a base of approximately 60 million people over age 65 or younger with certain disabilities, and is the largest single healthcare payer. However, the law actually prevents Medicare from carrying on direct negotiations with pharmaceutical companies. Specifically, it bars the Secretary of the Department of Health and Human Services (HHS) from managing the negotiations. Right now that’s Alex M. Azar II, a former executive with behemoth pharmaceutical company Lilly USA LLC, of Eli Lilly and Co.

Many were chagrined that the “American Patients First” does not, in fact, have any mandate for Medicare to negotiate directly with drug manufacturers. Some have described the situation in general as a gift, with a big bow around it, to America’s drug companies.

To understand why this happened, it helps to understand some of the history. Hearken to 2006, when Congress was in the throes of arguing the federal law around Medicare’s Part D law, the Medicare Modernization Act that became enforced in 2003. It was the most extensive rejuvenation of the program in 38 years.

Lobbyists persuaded lawmakers that if Medicare gained the ability to negotiate, that it would be akin to price control and an affront to the free market. Insurance companies in charge of subsidizing the new coverage were charged with managing drug costs.

Drugs Do Come Cheaper

In contrast, AARP invites us to consider how the Veterans Health Administration (VHA) deftly negotiates drug prices. The proof is in the pricing, as VHA pays 80 percent less for brand names than Medicare Part D. The VHA’s formulary list, that magic roster of medications it covers is a powerful negotiating tool. The relationship between Medicare and Medicaid that exists within the Food and Drug Administration (FDA) means the former two agencies must cover all FDA-approved drugs. That’s in spite of the fact that less expensive and equally effective medications can be bought on the open market.

Maybe you wonder how your fellow Americans feel about all of this. Big surprise: Democrats, Republicans, and independents are all pretty much on the same page. That’s according to a report from the National Academies of Sciences, Engineering, and Medicine. The analysis states emphatically that “finding a way to make prescription medicines — and healthcare at large — more affordable for everyone has become a socioeconomic imperative.”

According to the Henry J. Kaiser Family Foundation, a majority of Democrats (96 percent), Republicans (92 percent), and Independents (92 percent) think that yes, our government should have to negotiate power here.

Maybe Yes, Maybe No

Kaiser’s analysis of this conundrum over the “noninterference clause” is this. Those in favor of having Azar negotiate think this would result in leverage to reduce drug costs, especially around medications with sky-high prices but with no competition. They say private plans just don’t pack enough punch that way.

As expected, those who proclaim “no” shrug and opine that the Secretary simply couldn’t get better deals done. Then there’s the argument that haggling over price would inhibit pharma’s research and development, limiting the opportunities for more and better medications to improve quality of life and save lives.

As Kaiser notes, in addition to allowing the HHS Secretary to make better deals on drugs, another option would be to establish a public Part D plan that works in partnership with private Part D. “The Secretary would establish a formulary for the public Part D plan and negotiate prices for drugs on that formulary.”

There’s also a compromise approach of sorts in the mix that would address those expensive drugs and those that don’t have therapeutic alternatives: The Secretary could negotiate those.

At the end of the day, before Medicare can become the drug price negotiator extraordinaire, the law must be changed, and that’s a big lift. Based upon history, even Republicans are not expected to want to do this, and for sure pharma will recoil. That leaves consumers using Part D watching and waiting for change.

Drug Negotiation Side Effects

Increasing negotiating around Medicare could have ramifications if the President transfers expensive medications from Part B — the first Medicare legislation in 1965 —
to Part D, says The New York Times.

AARP says it’s worried about increasing out-of-pocket charges if this happens. Also, 9 million Medicare members in Part B don’t have Part D, leaving a void as to who will pay medication costs.

The publication asked doctors for their opinions and one responded that one misstep could be “a disaster.” Another worried about Part D drugs’ prices increasing more than Part B’s. Still, other notes protected classes of Part D drugs that must be covered by insurance plans, but in this instance may hamper Part D negotiations.

 

 

Pharma breathes easy as Trump’s drug pricing plan fizzles

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https://www.healthcaredive.com/news/pharma-breathes-easy-as-trumps-drug-pricing-plan-fizzles/523387/

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President Donald Trump took to the Rose Garden Friday, unveiling the “American Patients First” blueprint that senior administration officials touted as “the most comprehensive plan to tackle prescription drug affordability.”

Despite the rhetoric, Wall Street analysts, lobbyists and academics say the plan, which heavily targets the role pharmacy benefit managers play in the healthcare system, will do little to put downward pressure on healthcare spending.

Drugmaker stocks jumped immediately following the President’s speech.

“There are no major surprises, it spares the pharmaceutical industry of the reform that they most vehemently oppose,” a pharmaceutical lobbyist told BioPharma Dive in an interview following the Trump speech.

“Real reforms that advocates say will move the needle, none of them are included. There’s a lot of tinkering around the edges,” the lobbyist said. “By and large, the amount of money that this health system, that government and private payers are going to be spending on prescription drugs is probably not going to change significantly.”

The blueprint, which echoes many of the ideas first put forward in Trump’s FY 2019 proposed budget and the White House Council of Economic Advisers drug pricing report, focuses on four areas: lowering high list prices set by manufacturers; equipping government and private payers with new tools to negotiate prices; lowering out-of-pocket costs for consumers and taking steps to stop other countries from “freeloading” off of American innovation.

Notably, however, the blueprint only states that “HHS may” take many of proposed actions in response to Trump’s call to lower drug prices.

Pricing in drug ads?

Since Trump took office, most of the action on drug pricing has come from the Food and Drug Administration, which has gone about as far as it legally can on the issue by pushing for greater competition in drug markets.

The blueprint echoes some of those initiatives and says curbing abuse of FDA’s Risk Evaluation and Mitigation Strategy (REMS) programs will be a priority to help generic drugs come to market faster. It also seeks to promote uptake of biosimilars.

“We are getting tough on drugmakers that exploit our patent laws to choke out competition. Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies,” Trump said.

The generic drug lobby immediately praised Trump’s speech.

“President Trump’s embrace of generic and biosimilar competition as a key to lowering brand-name drug prices is an important step forward for patients coping with skyrocketing health care costs,” Association for Accessible Medicines CEO Chip Davis said in a statement.

Perhaps the only notable deviation from ideas already hinted at in prior speeches by officials was a call for the FDA to evaluate whether direct-to-consumer drug advertising should include list prices.

​”Think about all the time everybody spends watching drug company ads, and how much information companies are required to put in them. If we want to have a real market for drugs, why not have them disclose their prices in the ads, too?” said Department of Health and Human Services Secretary Alex Azar, who spoke at the Rose Garden after Trump. “We’re immediately going to look into having the FDA require this.”

Medicare Part D changes

Proposed Part D reforms would allow greater benefit design flexibility; provide free generic drugs to low-income seniors; require such plans to pass on a minimum percentage of drug rebates with patients; disincentivize plans to accelerate beneficiaries into catastrophic coverage through branded drugs by establishing a new out-of-pocket maximum.

Requiring Part D plans to pass on rebates to consumers is one idea PBMs have rallied against. But the President’s blueprint hinted at further action the government could take, mentioning reexamination of how drug rebates are currently treated under safe harbor laws as a future “opportunity.”

Yet investors in PBMs didn’t appear to take that threat all that seriously. Shares in Express Scripts, one of the largest PBMs, traded up Friday afternoon, as did shares in UnitedHealth Group, which owns Optum.

“Getting rid of rebates and other price concessions would leave patients and payers, including Medicaid and Medicare, at the mercy of drug manufacturer pricing strategies,” said the Pharmaceutical Care Management Association, a lobby for PBMs, in a statement following Trump’s speech. “Simply put, the easiest way to lower costs would be for drug companies to lower their prices.”

CVS, which runs a large PBM, said policies that lowered drug prices would be aligned with its business model and are unlikely to have a negative impact on profitability.

The blueprint also proposes changing Part D plan formulary standards to require a minimum of one drug per category or class instead of two.

PhRMA immediately cautioned that any changes to the system could potentially limit access to new drugs. “The proposed changes to Medicare Part D could undermine the existing structure of the program that has successfully held down costs and provided seniors with access to comprehensive prescription drug coverage,” the drug lobby said in a statement.

The plan also will target Medicare Part B by limiting price increases that exceed the inflation rate within the program and restricting incentives for providers to prescribe high-cost drugs. Specifically, the blueprint calls for HHS to leverage the Competitive Acquisition Program for Part B.

Future disruption

Some more substantive changes are contemplated by the blueprint, although the document didn’t lay out any concrete steps for how to achieve them.

One question raised by the plan, for instance, asks whether PBMs should have a fiduciary duty to act solely in the interest of whoever they are managing benefits for, soliciting input on how this might impact PBMs’ ability to negotiate drug prices.

“Depending on how that is done, it could have a substantial effect,” Allan Coukell, a drug pricing expert at Pew Charitable Trusts, told BioPharma Dive in an interview.

Democrats and advocacy groups blast plan

One big idea not included in the blueprint is a call for the federal government to have Medicare negotiate drug prices. “We’re not calling for Medicare negotiation in the way that Democrats have called for,” one of the senior officials told reporters Thursday night.

Democrats blasted the speech, saying that Trump is turning his back on his campaign promise to stop the pharmaceutical industry from “getting away with murder.”

“The President spent last year pressing Congress to pass a massive tax cut — which gives away billions of dollars to drug companies and their executives who are already rich — but this year the President is apparently abandoning his campaign promise to authorize Medicare to negotiate directly with drug companies to lower prices,” House Committee on Oversight and Government Reform Ranking Member Elijah Cummings said in a statement Friday.

The pharmaceutical industry has spent heavily this year on lobbying the federal government, perhaps with Trump’s twice-delayed drug pricing plan in mind. According to a database maintained by the Center for Responsive Politics, spending by industry on lobbying this year totaled $84.8 million through April 24.

Click to access AmericanPatientsFirst.pdf

 

 

 

How A Drug Company Under Pressure For High Prices Ratchets Up Political Activity

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Business looked challenging for Novo Nordisk at the end of 2016. As pressure mounted over the pharma giant’s soaring insulin prices, investors drove its stock down by a third on fears that policymakers would take action, limit prices and hurt profits.

Then things got worse. A Massachusetts law firm sued the company and two other pharma firms on behalf of patients, claiming that high insulin prices of hundreds of dollars a month forced diabetics to starve themselves to minimize their blood sugar while skimping on doses. At least five states began investigating insulin makers and their business partners.

As scrutiny rose, Novo Nordisk engaged in what analysts say is a time-honored response to public criticism. It aggressively ratcheted up spending to spread its influence in Washington and to have a louder say in the debates over drug prices.

The drugmaker’s political action committee spent $405,000 on federal campaign donations and other political outlays last year, more than in 2016 — an election year — and nearly double its allocation for 2015, data compiled by Kaiser Health News show.

“We remain committed to being part of the discussion,” said Tricia Brooks, head of government relations and public affairs for Novo Nordisk, acknowledging scrutiny over insulin prices but saying the company has many other issues to work on with policymakers. “I don’t want us to run away from it and hide or keep our head down and wait for it to roll over.”

Novo Nordisk also spent $3.2 million lobbying Congress and federal agencies in 2017, its biggest-ever investment in directly influencing U.S. policymakers, according to the Center for Responsive Politics.

Part of that surge included summoning more than 400 Novo Nordisk employees to contact lawmakers and their staffs on Capitol Hill, “a huge increase from anything we’ve ever done before,” Brooks said.

Taken together, the increases represent a “major corporate policy shift” for the company and appear to be a classic business response to growing political risk, said Kent Cooper, a former Federal Election Commission official who has tracked political money for decades.

The pharma industry as a whole has behaved similarly, cranking up political contributions and lobbying. Meanwhile, despite much talk about change, Congress and the Trump administration have done little to control drug prices or threaten drug-company profits.

Pharma businesses overall made political donations of $12.1 million last year, down from a $13.6 million election-year surge in 2016 but 9 percent higher than the haul for 2015, according to the KHN analysis. Pharma industry lobbying expenses surpassed $171 million last year, the highest level since 2009, during negotiations over the Affordable Care Act, according to CRP.

“It’s been hot in the health care arena for — how many years now?” said Steven Billet, who teaches lobbying and PAC management at George Washington University. “Anybody in this world now is sitting there thinking, “When I go back to the board next year, I’m going to ask for 15 percent more in my [lobbying and campaign finance] budget. Because this isn’t going away.’”

Like most big corporations, Novo Nordisk runs a political action committee, or PAC, which solicits employee donations and gives the proceeds to political candidates’ campaigns. The company is Danish. Only workers who are U.S. citizens or permanent residents are allowed to support the PAC.

Like many PACs, Novo Nordisk spreads money to both parties, concentrating on powerful committee members and other leaders. Since 2013 it has given $22,500 to House Speaker Paul Ryan, a Republican, and $20,472 to South Carolina’s James Clyburn, a member of the Democratic House leadership.

Brooks gave the PAC $4,370 last year, the data show. Some employees gave as little as $20 or $30.

The firm’s influence-seeking has grown along with its U.S. sales, which went from hundreds of millions of dollars in the early 2000s to some $9 billion last year. Its biggest business is diabetes, including various types of insulin whose list prices have more than doubled in recent years.

The wholesale list price for a vial of Novo Nordisk’s Levemir, a long-acting insulin, went from $144.80 in 2012 to $335.70 in January, when the price rose 4 percent, according to Connecture, a research firm.

Even Alex Azar, a former Eli Lilly executive who became Health and Human Services secretary in January, said in his confirmation hearing that “insulin prices are high, and they’re too high.” Along with Novo Nordisk and Sanofi, Lilly is one of the three big insulin makers under investigation by state attorneys general for price increases that seem suspiciously similar in size and timing.

Sanofi and Lilly both spent more last year on political donations and federal lobbying than Novo Nordisk. Lilly’s political spending was $548,100 for 2017, up 12 percent from 2015, the previous off-election year, the data show. Sanofi’s was $527,200, down from 2015.

But potential insulin price limits threaten Novo Nordisk more than those companies because diabetes-related drugs account for an exceptionally big portion of its business, analysts said. Several proposals under consideration by Congress could lower insulin prices or limit future increases.

One would allow the Medicare program for seniors to negotiate prices for covered drugs, thus lowering the cost.

Other proposals would make it easier for competing, “biosimilar” alternatives to break through the thicket of patents created by sellers of complex drugs such as insulin. Others would bring more transparency, requiring companies to publish and justify price increases.

None of the proposals has made it out of congressional committees. In the face of inaction by Washington, Novo Nordisk’s stock has recovered much of the ground it lost in 2016.

Novo Nordisk rejects suggestions that it coordinated price increases with competitors. So do Sanofi and Lilly.

List prices such as those tracked by Connecture don’t reflect what patients or their insurers ultimately pay, said Novo Nordisk spokesman Ken Inchausti. Growing discounts and rebates substantially reduced the reported list price, he said.

Even including discounts, however, the company’s net profit margin for 2017 was 34 percent, its highest since at least 2000, when it was half that high.

Official filings show Novo Nordisk lobbyists have been weighing in on numerous measures related to drug prices, including proposals to import less expensive drugs from Canada.

The company lobbies Washington on a wide range of issues including diabetes prevention, budget matters, chronic disease and making obesity an accepted medical disease that insurers will pay to prevent, Brooks said.

But last year’s increase in campaign donations and lobbying doesn’t look like business as usual for Novo Nordisk, said Billet, a former AT&T lobbyist who directs GWU’s Legislative Affairs program.

“I’m not surprised,” he said. “They’ve obviously had some issues recently. This is maybe a predictable enough element in their strategy.”

 

Federal Appeals Court Puts Chill On Maryland Law To Fight Drug Price-Gouging

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https://khn.org/news/federal-appeals-court-puts-chill-on-maryland-law-to-fight-drug-price-gouging/

States continue to battle budget-busting prices of prescription drugs. But a federal court decision could limit the weapons available to them — underscoring the challenge states face as they, in the absence of federal action, go one-on-one against the powerful drug industry.

The 2-to-1 ruling Friday by the U.S. 4th Circuit Court of Appeals invalidated a Maryland law meant to limit “price-gouging” by makers of generic drugs. The measure was inspired by cases such as that of former Turing Pharmaceutical CEO Martin Shkreli, who raised one generic’s price 5,000 percent after buying the company.

The law, which had been hailed as a model for other states, is one of a number of state initiatives designed to combat rapidly rising drug prices. It gave the state attorney general power to intervene if a generic or off-patent drug’s price increased by 50 percent or more in a single year.

If dissatisfied with the company’s justification, the attorney general could have filed suit in state court. Manufacturers would have faced a fine of up to $10,000 and potentially have to reverse the price hike. The generics industry was fiercely critical of the law.

“We are evaluating all options with regard to next steps,” said Maryland Attorney General Brian Frosh in a statement. His office would not elaborate further.

The state could appeal to have the case heard “en banc,” meaning by the full 4th Circuit, with jurisdiction over five states.

Such appeals aren’t commonly granted, but this law could be a strong candidate, suggested Aaron Kesselheim, an associate professor at Harvard Medical School who researches drug-price regulation.

The Friday ruling looms large as other state legislatures grapple with ever-climbing drug prices.

Similar price-gouging legislation has been introduced in at least 13 states this year, though none of those measures became law, according to the National Conference of State Legislatures (NCSL). Three other bills failed to gain passage.

The NCSL also cited the law in a March advisory for states seeking new approaches to regulating drug prices.

The court’s finding could have a chilling effect on such efforts, especially as more state legislatures wrap up business for 2018.

“A negative court ruling will put a damper or a pause on state activities,” said Richard Cauchi, NCSL’s health program director. “Unless this topic is your No. 1 priority of the year, your legislators are juggling multiple bills, multiple strategies. When bill three gets in trouble, they move to bill four.”

The appeals court held that Maryland’s law overstepped limits on how states can regulate commerce — specifically, a constitutional ban on states controlling business that takes place outside their borders. The majority ruling argues that since most generics manufacturers and drug wholesalers engage in trade outside Maryland, the state cannot control what prices they charge.

In a dissenting opinion, the panel’s third judge argued Maryland can regulate the drug prices charged within the state since the law is meant to affect only medications being sold to its own residents.

Kesselheim, in an article published last month in the journal JAMA, argued a similar point.

Regardless, striking down a law on constitutional grounds can be particularly discouraging, suggested Rachel Sachs, an associate law professor at Washington University in St. Louis who researches drug regulations.

“If it had been a rejection on vagueness grounds, that’s something you can cure with a more specific statute,” she said. “But the fact that they said this is unconstitutional poses real concern for other states.”

That’s important. While the federal government has talked a big game on bringing down drug prices, it has done little. Instead, states have taken the lead — spurred by the budget squeeze pricey prescriptions impose on their Medicaid programs and on state employee benefits packages.

But states have far fewer tools at their disposal than does Congress. Most state laws so far tackle only pieces of the problem — targeting a specific drug or particular practice, experts said.

“We’ll get more broad and better evolution on this issue if the federal government decides to take it seriously — which it hasn’t so far,” Kesselheim said.

To be fair, Maryland’s law is only one of a bevy of approaches.

Other states have focused on price transparency laws. In California, drug companies must disclose in advance if a price might increase by more than a set percent and that they justify the increase. Industry has sued to block the California law.

New York has limited what the state will pay for drugs, establishing a process to review if expensive drugs are priced out of step with their medical value.

A number of states have since 2017 passed laws regulating pharmacy benefit managers — the contractors who negotiate discounted drug coverage for insurance plans, but who rarely reveal what level of discount they actually pass on to consumers.

Experts expect that activity to continue, especially as escalating drug prices show little sign of letting up.

“The states are going to keep trying and experimenting,” Sachs added. “This is a problem that isn’t going away.”

Even efforts such as Maryland’s — which targeted price-gouging — will likely remain at the forefront.

“I don’t think this is the end of states trying to do something on price-gouging,” said Ellen Albritton, a senior policy analyst at the left-leaning advocacy group Families USA who consults with states on drug-pricing policy. “It’s such an issue that offends people’s sensibilities. It’s crazy people can do this.”