Get Used To High Drug Prices As Big Pharma Emerges From Election Stronger Than Ever

America pays way more than other countries do for prescription drugs — even ones that may not work. This isn’t likely to change soon, after election night brought a big win for Big Pharma.

On the campaign trail, Hillary Clinton, Bernie Sanders, and Donald Trump agreed on at least one thing: the need to control America’s spiralling costs of prescription drugs.

But after Tuesday’s election, the likelihood of drug pricing reform seems small. In California, Big Pharma spent more than $100 million to help defeat a ballot measure that would have pegged the state’s drug purchases to the discount rates currently offered to the Veterans Administration (VA).

Anticipating a big fight if Clinton had won the presidency and the Democrats had taken over both houses of Congress, the industry lobbying group PhRMA had also reportedly hiked its membership dues to build a $100 million war chest to fight federal price controls. Industry Political Action Committees, meanwhile, donated millions to congressional candidates, especially Republicans, according to the biomedical news site STAT.

That’s not to say that Big Pharma is thrilled with president-elect Trump, who has suggested that the huge Medicare program, which provides health insurance for senior citizens, should be able to negotiate prices with drug companies — something that’s currently prohibited by law. But with both houses of Congress remaining firmly under GOP control, legislation to shake up drug pricing seems unlikely. And specific plans proposed by Clinton, including fines for companies that jacked up prices without clear justification, are now off the table.

In the immediate aftermath of the election, pharma and biotech stocks were looking strong. Nasdaq’s biotech index was up Wednesday almost 9%, reaching a level not seen in a month, while SPDR S&P's biotech index surged by about 11%. That meant big gains for leading companies like Biogen, Gilead Sciences, and Amgen.

#Trump has made BIOTECH GREAT AGAIN $IBB $XBI $CELG $HALO $XLRN $SGMO ....screaming today

Wild day in healthcare w/ $IBB $XBI up BIGLY While hospitals/services getting killed on potential ACA repeal: $THC -28% $CYH -25% $HCA -16%

The biggest win for Big Pharma on election day, however, was the defeat of Proposition 61 in California, which would have barred state agencies from spending more on a given drug than the VA does. Early on, it looked like Prop 61 might pass. But then the industry spent $109 million to fight the plan, six times more than the measure’s main backer, the AIDS Healthcare Foundation. In the end, the measure was defeated 54% to 46%.

“Prop 61 has done a lot to put the issue of high drug prices on the political agenda,” Larry Levitt, senior vice president of the Kaiser Family Foundation, a health policy non-profit based in Menlo Park, California, told BuzzFeed News. “But it highlights how hard it is to go up against the drug industry.”

It was also unclear whether Prop 61 would have worked as intended. Drug companies might have refused to sell certain drugs at the prices California demanded, leading to shortages. Or they might have simply raised prices for the VA.

“You can’t perturb part of the system without another part of the system responding,” Peter Bach, director of the Center for Health Policy and Outcomes at the Memorial Sloan-Kettering Cancer Center in New York, told BuzzFeed News.

These wins for pharma come at a time when the public is furious about drug prices. 

These wins for pharma come at a time when the public is furious about drug prices. According to a Kaiser Family Foundation poll run in September, 77% of Americans think that drug prices are unreasonable. While only about one in four people on prescription drugs say they are personally struggling to pay their bills, the public is outraged over recent price-hike scandals.

First there was Valeant Pharmaceuticals, which became a Wall Street darling for an aggressive policy of buying up old drugs and jacking up the price, but later stumbled after coming under attack in congressional hearings for price gouging.

Then there was Martin Shkreli, dubbed “the most hated man in America” after his company Turing Pharmaceuticals increased the price of Daraprim, used to treat parasitic infections in patients with cancer or HIV, from $13.50 to $750 per pill.

Most recently, the spotlight has been on Mylan, manufacturer of the EpiPen, used to give a life-saving shot of epinephrine to treat severe allergic reactions. The price of a pack of two EpiPens has risen from about $100 in 2009 to more than $600 today.

Those aren’t isolated examples. From 2008 to 2015, the price of nearly 400 generic drugs increased by more than 1,000%. Last week, Bloomberg reported that the Justice Department is conducting a criminal investigation of two dozen generic drug makers for suspected price collusion, and expects to file the first charges by the end of the year.

In the big picture of prescription drug spending, though, costs were beginning to come under control as recently as a few years ago, with total spending in the US rising only by 0.2% in 2012. That was mostly due to blockbuster drugs coming off patents, and cheaper generics becoming available. But things changed abruptly after 2013.

Drug And Total Health Care Spending Increase

Peter Aldhous for BuzzFeed News / Via

The main reason for the recent jump in spending is the introduction of several new drugs for hepatitis C, including Gilead’s Sovaldi. Unlike previous treatments, these drugs can actually cure an infection that affects an estimated 3.5 million Americans, and can lead to severe liver disease. But they come with a massive price tag: a 12-week course of Sovaldi costs more than $80,000.

At least the new hepatitis C drugs work. More worrying, say health policy experts, is the example of eteplirsen, a drug for Duchenne muscular dystrophy given accelerated approval by the Food and Drug Administration (FDA) in September under pressure from patients, but against the recommendation of a scientific advisory committee. Manufactured by Sarepta Therapeutics of Cambridge, Massachusetts, eteplirsen is priced at $300,000 per year.

Eteplirsen has not been shown to ease the muscle-wasting genetic disease, and drives only small increases in the production of the protein dystrophin, which children with the condition lack. Senior FDA staff could not agree whether this was likely to be beneficial. Allowing the approval to go ahead, FDA commissioner Robert Califf acknowledged “major flaws in the clinical study design, making the judgment on science difficult.”

According to health policy experts, eteplirsen highlights an absurd system that lets drug firms set astronomical prices for new drugs — whether or not they provide clear value for money.

“Right now, the price of a hepatitis C cure is less than a sixth of the price of a drug that doesn’t work for muscular dystrophy that we’re going to use anyway,” Adams Dudley, director of the Center for Healthcare Value at the University of California, San Francisco, told BuzzFeed News.

In most developed countries, where prescription drugs typically cost only about half as much as in the US, prices must be justified in relation to the benefits drugs bring. But in the US, no such mechanism exists.

And after Tuesday, the chances of creating one seem slim.

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