The Biden administration initiated the drug price negotiation bill. The CEOs all voiced that the US prescription drug prices will be reduced?

"At the beginning of 2021, more than 300 drugs in the United States have decided to increase their prices; on the first day of 2020, the prices of 250 drugs have increased by an average of about 5%; in the first 10 days of 2019, the prices of 490 prescription drugs in the United States have increased.

Recently, the Secretary of the US Department of Health and Human Services (HHS) Xavier Becerra announced the Biden administration’s plan to reduce the cost and price of prescription drugs

The bill triggered strong opposition from the pharmaceutical industry, including CEOs of companies such as AbbVie, BMS, Eli Lilly, and GSK, all expressed concern or even opposition to this increase in control of drug pricing

As one of the countries with the highest prescription drug prices in the world, successive US governments have been seeking ways to reduce prescription drug prices, and drug pricing advocates continue to call for reforms

01 Patents are no longer evergreen

Lack of competition is a key factor contributing to the excessively high prices of these prescription drugs

According to the plan, it is possible to legislate to prohibit pharmaceutical companies from paying fees to generic drug manufacturers in order to postpone the marketing of other drug versions

The patent protection of medicines is regarded as its lifeline

On the one hand, drug patent evergreen objectively delays the entry time of generic drugs and increases consumers’ medical costs; on the other hand, excessive and continuous patent evergreen will also lead to fewer and fewer new drugs on the market, which is not conducive to The overall innovation capability of the pharmaceutical industry and the R&D incentives for certain intractable drugs

The academic community believes that to deal with evergreen drug patents, legislative, administrative and judicial control is required

India is the first country in the world to statuteally ban the granting of patents on derivatives of known substances, aiming to block patents on "evergreen" medicines

Administratively, the FDA and the U.

Woodcock pointed out that the patent "jungle" created by renewing patent applications for inventions disclosed in earlier patents may delay competition for generic drugs or biosimilars

Speaking of building a fortress of patent protection, through the strategy of continuously obtaining different functional patents for the same product, the patent protection period can be extended, so as to realize the evergreening of patents and expand the market monopoly of original research drugs.

Although the patent protection of Xiu Meile is extremely controversial, it has indeed succeeded in turning Xiu Meile into an evergreen cash cow

The letter from the head of the FDA also sounded an alarm for the industry.

02 The game between the pharmaceutical industry and the government

The pharmaceutical industry is one of the largest industries in the United States.

Analysis generally believes that opposition from the pharmaceutical industry and Republicans in Congress will make this proposal an uphill battle
.
According to Fierce Pharma, many PhRMA members expressed concern about the Biden administration's efforts to reduce the cost of medicines
.
In an open letter to Congress, the CEOs of major biopharmaceutical companies, including Eli Lilly, AbbVie, BMS, Biogen, GSK, etc.
, wrote: Allowing medical insurance to negotiate drug prices would “threat patients’ access to drugs.
At the expense of future medical progress
.
"

Although Cowen analyst Rick Weissenstein said that the Democratic Party now has a majority in both the Senate and the House of Representatives, so legislation to control drug costs will be more likely to be passed than in 2010 and 2020
.
But more analysts believe that the probability of success in this medical insurance negotiation is not high
.

It is worth noting that although it is unlikely that the bill will be passed by both the Senate and the House of Representatives at the same time, it is clear that it has already caused the pharmaceutical industry to take it seriously and regard it as a threat
.
The CEOs of the pharmaceutical companies warned in the letter that a proposal is being considered that will cut the company's innovation and research and development costs by 1.
5 trillion US dollars within ten years, which means that the development of new drugs by biotech companies will be reduced by 90% or more.

.

Earlier, Frazier, former CEO of Merck & Co.
, stated in a PhRMA meeting that “Congress’s proposal will destroy this industry,” Frazier said.
“Although large companies like Merck will survive, the research done by pharmaceutical companies will be greatly reduced.

"According to the proposal, Merck will cut research and development by nearly 50%
.

In fact, the game between pharmaceutical companies and the US government on drug prices has a long history
.

The then U.
S.
President Trump made lowering the price of prescription drugs as the core promise of his campaign during the 2016 campaign, whether it was the introduction of the American Patient First Plan, the establishment of generic drug companies in hospitals, and the signing of administrative orders to reduce drug prices.
.
.
However Many administrative orders aimed at reducing the price of medicines have had little effect due to legal restrictions and strong resistance from the pharmaceutical industry
.

The current President Biden also vowed to reduce the cost of medicines and allowed the US government's medical insurance program "Medicare" to negotiate drug prices
.

Just last month, Biden asked lawmakers to enact relevant legislation aimed at lowering the price of prescription drugs, which met opposition from the pharmaceutical industry
.
The US Pharmaceutical Research and Manufacturers Trade Organization criticized the Biden administration’s plan to initiate drug price negotiations in "Medicare," and said it would reduce funding for the development of new drug therapies
.
Eli Lilly’s chairman and chief executive officer David Ricks said: “This is to implement a smokescreen for the government to control drug prices.
We cannot and will not support any policy that harms the interests of patients who actually use drugs
.
”

In addition, the U.
S.
House Ways and Means Committee is preparing to vote on a bill that requires negotiations on the 125 brand-name drugs that account for the most medical insurance expenditures, with a price cap set at 120% of the average price paid in six other countries
.
As early as 2019, a bill similar to this was passed in the House of Representatives, but it failed to win the majority of the Senate
.

Some analysts said that this negotiation for medical insurance prices may still face opposition from the Senate
.

Ron Wyden, chairman of the Senate Finance Committee, is working on a relatively mild alternative proposal
.
It is reported that the proposal will allow the government to negotiate prices for drugs that have been on the market for many years but have not yet reduced prices.
Ron said that pharmaceutical companies may be more acceptable
.

The US Congressional Budget Office (CBO) has stated that it is expected that by 2029, the pharmaceutical industry will lose more than US$300 billion due to price cuts
.