The group of centrist Democratic lawmakers who voiced their concerns about H.R. 3, House Democrats
' prescription drug affordability bill, in May included many of the usual suspects, including Rep. Scott Peters (D-Calif.), who received the seventh-most contributions from pharmaceutical industry
PACs and led an unsuccessful pressure campaign to prevent the Biden administration
from supporting a waiving of the prescription drug affordability mandate.
were more surprised to see Rep. Jake Auchincloss
(D-Mass. ), a freshman from a liberal district, as the letter's lead co-author, alongside Peters.
The Auchincloss-Peters letter echoed the pharmaceutical industry's well-known concerns that H.R. 3, a bill that would give Medicare
the authority to negotiate lower prescription drug prices
, would discourage research
and development. Instead, Auchincloss, Peters, and eight of their colleagues called for a bipartisan bill that would "preserve our invaluable innovation
Auchincloss has since become more specific, objecting to a provision in H.R. 3 that caps prescription prices subject to federal negotiation at 120% of the average price in Australia
, and the United Kingdom
, countries where the government has a much stronger hand in price negotiation.
“Price controls... because of the uncertainty they create, are a massive deterrent to risk capital that invests in the next generation of drugs,” Auchincloss told The Uprising in May, warning that the bill, as written, would cost Massachusetts
thousands of jobs
and delay the development of Alzheimer’s and cancer
Rena Conti, a Boston University business school
professor specializing in prescription drug policy, told Stardia that dire predictions about the impact
of price negotiation on innovation are straight from Big Pharma
's playbook for thwarting reform.
“There is very little, if any, daylight between what his position was in May and Pharma’s positions,” Conti said, “which is quite interesting given that he is a Democrat from Massachusetts.”
Dr. Aaron Kesselheim, a Harvard
Medical School professor who has extensively researched the role of federal government research in private-sector pharmaceutical innovation, described the common pharmaceutical industry talking point as a "scare tactic."
According to Kesselheim, even when public officials and advocacy groups repeat the exaggerated warnings with sincerity, they are frequently swayed by Big Pharma's ability to shape the discourse.
Pharmaceutical companies have a “loud pulpit, a loud microphone” because they invest so much money
in lobbying and advertising, according to Kesselheim.
Conti, Kesselheim, and other proponents of government price negotiation point out that a significant portion of pharmaceutical industry drugs already originate with federal government research funding, which H.R. 3 would increase. The development of the Hepatitis C drug sofosbuvir, sold by Gilead under the brand Sovaldi, is just one recent example of how federal research incubated drugs that were later sold.
And, despite stricter price regulations that result in significantly lower patient costs, countries such as Germany, where drugmaker BioNTech
assisted in the development of Pfizer
's COVID-19 vaccine
, have innovative development climates.
We can have affordable drugs while also funding research and other activities that bring the next generation of drugs to market.
Rena Conti, professor of business administration at Boston University
“We can have affordable drugs while continuing to fund research and other activities that bring the next generation of drugs to market,” said Conti, who opposed government price negotiations until she became convinced that no other mechanism would lower costs after years of research. “We already do so,” she added.
Federal campaign finance
data may explain Auchincloss' prominent role in the effort to make H.R. 3 more favorable to pharmaceutical companies.
Auchincloss received support from a super PAC
during his 2020 campaign, which was funded in large part by figures with close ties to the pharmaceutical industry, which is unusual for a first-time candidate competing for an open seat.
Dr. Laurie Glimcher, Auchincloss' mother, was the single-largest donor to the pro-Auchincloss super PAC, Experienced Leadership Matters, giving $105,000 of the group's $575,000 haul. Glimcher is president
of Boston's Dana-Farber Cancer Institute and a member of the board of directors
of GlaxoSmithKline, a British
Patrick Ronan, CEO of Greenleaf Health, which advises pharmaceutical companies seeking FDA
approval for drugs, also contributed $5,000. (Auchincloss' sister Kalah works for the company as an executive vice president.)
Aside from Auchincloss and the super PAC that supports him, Ronan has only ever given to Republican
candidates and campaign arms. Former Sens. Kelly Loeffler and David Perdue (R-Ga.), whose losses in January allowed Democrats to take control of the Senate
, were among the most recent recipients of Ronan's generosity.
Other contributors to the pro-Auchincloss super PAC include health care
industry investors Robert and Jonathan Kraft, who gave the super PAC $5,000 and $5,600, respectively. It is unclear what aspects of the health care industry the father-son duo are invested in, though their website specifically mentions “life sciences,” a term for traditional pharmaceutical or biologic development.
Furthermore, despite his pledge to reject corporate political action committee contributions, Auchincloss has received significant campaign contributions
from top executives at pharmaceutical companies.
According to Open Secrets' analysis of federal campaign finance data, Auchincloss received $65,435 from pharmaceutical company employees in the 2020 election
have no bearing on his opinions; his perfect voting record
in the Democratic caucus speaks for itself.
Rep. Jake Auchincloss (D-Mass.) spokeswoman Matt Corridoni
That finding is not newsworthy in and of itself, because a company's rank-and-file employees' political giving habits do not have to reflect the views of their employers.
According to a Stardia analysis of federal campaign finance data, the CEOs
of Alnylam Pharmaceuticals, Amgen, Dicerna Pharmaceuticals, Frequency Therapeutics, Hemera Biosciences, Ironwood Pharmaceuticals, Lytica Therapeutics, Proterris, and Tilos Therapeutics, as well as the chief scientific officers, contributed $59,200 of the $65,435 total.
Many of these companies are based in or near the Auchincloss district in the Boston area, which is one of the country's densest clusters of biologics development medical treatments that use living organisms or other elements that make them more complex than a traditional, chemically synthesized drug.
Pharmaceutical executives have contributed a total of $11,850 to Auchincloss' re-election campaign so far this election cycle.
Neither of those totals includes pharmaceutical company board members like Glimcher, pharmaceutical regulatory consultants like Ronan and Kalah Auchincloss, pharmaceutical and life-science investment financiers like BioImpact Capital's Chris Bardon, executives at trade groups that represent pharmaceutical companies, or spouses of pharmaceutical executives.
When those contributions are factored in, Auchincloss' total haul from pharmaceutical industry insiders rises to $94,800 for the 2020 election cycle, up from $39,250 thus far this cycle.
Auchincloss won the crowded Democratic primary
in Massachusetts' 4th Congressional District by a single percentage point, despite the fact that he was unable to legally coordinate with any groups supporting him independently.
Auchincloss spokesperson Matt Corridoni categorically denied any suggestion that the super PAC's funders influenced Auchincloss' position.
“There is no conflict of interest because the PAC was not founded by the Congressman and he is prohibited from coordinating with them,” Corridoni said in a statement
, adding that “any suggestion that he has done so without proof is journalistic malpractice and calls your outlet’s integrity into question.”
“Outside spending is a fact of life in national politics
, which is why we need to overturn Citizens United, which Congressman Auchincloss supports,” Corridoni continued, adding that “Congressman Auchincloss does not make his decisions based on positive or negative IEs.”
Regarding direct campaign contributions from pharmaceutical executives and other industry insiders, Corridoni stated, "Donations do not influence his views; his 100% voting record in the Democratic caucus speaks for itself."
The Former Republican Who Won a Tight Primary
Even Massachusetts politicians more progressive than Auchincloss have succumbed to the siren song of advocating for regional corporate interests and the jobs with which they are associated. Democratic Sens. Elizabeth Warren
and Ed Markey, for example, pushed for repeal of the Affordability Act.
However, there have been fewer instances of Bay State Democrats attempting to undermine one of Speaker Pelosi's top priorities.
Auchincloss, who succeeded former Rep. Joe Kennedy III, has been viewed skeptically by progressives
since his contentious primary victory in September 2020.
The 4th Congressional District in Massachusetts, which includes highly educated Boston suburbs as well as white working-class outposts like Fall River, is not the state's most left-wing district.
However, it is a solidly Democratic and liberal seat, and Auchincloss is a centrist who briefly registered as a Republican while campaigning for Massachusetts Gov. Charlie Baker in 2013 and 2014.
Auchincloss benefited from a slew of left-wing candidates in 2020, who split the progressive vote.
Jesse Mermell, a former aide to former Massachusetts Gov. Deval Patrick (D) and the progressive consensus pick, came in second place after Auchincloss, but she faced competition from at least two other candidates in the progressive lane: epidemiologist Natalia Linos, who received 11.6% of the vote, and financial regulator Ihssane Leckey, who received 11.1%.
Auchincloss received some pharmaceutical industry praise in May for his stance against international reference pricing, with the AstroTurf group Alliance for Patient Access, which is funded by pharmaceutical companies, sending mailers to voters
in the district calling him a “champion of patient access.”
However, in an effort to remind Auchincloss that he is under attack
from the left, the organization Social Security
Works paid for a mobile billboard
declaring that Auchincloss is “blocking efforts to lower your drug prices.” The billboard, which was transported across Massachusetts’ 4th on the bed of a truck
for a week in late May, provided Auchincloss’ district office phone number and encouraged voters to register to vote.
Our office does not base its decisions on D.C.
stunts, and claiming that there was "blowback" is wishful thinking on the part of whoever pitched this story.
Auchincloss publicly committed to voting for H.R. 3 regardless of its final form by early June, and he became a co-sponsor on June 25.
“He had to be dragged kicking and screaming
to that position, but gobs of pharmaceutical cash no longer outweigh the outrage of the American people
over our ludicrously high drug prices,” said Alex Lawson, executive director of Social Security Works.
Corridoni was offended by the suggestion that the billboard campaign influenced Auchincloss' decisions.
“Our office does not make decisions based on D.C. stunts, and claiming there was ‘blowback’ is wishful thinking on the part of whoever pitched this story,” Corridoni said. “We have been engaged in thoughtful and meaningful discussions on drug pricing with constituents, patient groups, and the Speaker’s office for months.
Corridoni cited a statement praising Auchincloss issued by Patients for Affordable Drugs Now, an advocacy organization that frequently collaborates with Social Security Works.
The June 30 statement, however, congratulates Auchincloss on becoming a co-sponsor of H.R. 3, not on leading a group of Democratic opponents of the bill.
“We are grateful that Reps. [Lori] Trahan and Auchincloss have stated their support for H.R. 3 and will vote in favor of its passage to lower drug prices for Americans,” said David Mitchell, a cancer patient who founded Patients for Affordable Drugs Now, in a statement.
The Decade-Long Battle
Against Big Pharma
Beyond any one congressman's views, Auchincloss' brush with progressive opposition provides a glimpse into the sometimes shaky staying power of pharmaceutical industry influence on Capitol Hill
For decades, the pharmaceutical industry has used fear-mongering to protect its lucrative patents
and intellectual-property rules, stifling political appetite for increased government regulation, even as prices skyrocket in tandem with executive pay.
The warnings are consistent: if the government uses its purchasing power to negotiate lower prices and reduce drug makers' profit margins, the public will be deprived of life-saving medications.
Marjorie Powell, a top official with PhRMA, the pharmaceutical industry's umbrella lobbying group, stated in 2003, the last time the federal government truly targeted the pharmaceutical industry, that "when government imposes price controls on an industry, innovation dries up."
When then-President George W. Bush and Congress expanded Medicare to cover prescription drugs
, the law forbade Medicare from directly negotiating drug prices with pharmaceutical companies, a clause that then-Sen. John McCain
(R-Ariz.) called “outrageous.”
Instead, the bill delegated price negotiations to a disjointed network of private insurers and middlemen, who have proven far less effective than a single entity at taming prices.
Except for drugs, which are the sole exception, Medicare negotiates or sets the price for every service it provides.
Harvard Medical School's Dr. Aaron Kesselheim.
For example, the Department of Veterans
Affairs’ health-care system has the ability to negotiate prices, and as a result, the prices the VA pays for the same drugs are roughly half as high as the prices Medicare pays.
The provision prohibiting Medicare price negotiation includes an exception that does not apply to any other good or service purchased by Medicare: hospital
procedures, doctors' services, and non-pharmaceutical medical devices, according to Kesselheim, director of Harvard Medical School's program on regulation, therapeutics, and liability.
“Medicare either negotiates or sets the price for every service it provides except drugs,” he explained. “It’s not only abnormal in the United States
, but it’s also abnormal in every other industrialized country in the world, which negotiates drug prices.”
The passage of the Affordable Care Act
in March 2010 did not change the situation. PhRMA agreed to contribute to the bill's expansion of insurance
coverage in exchange for assurances that the federal government would not use the bill as a vehicle for price negotiations or other reforms.
However, when Democrats retook control of the House in 2018, they made repealing the 2003 provision a top priority.
H.R. 3, the legislation they drafted, would authorize the Department of Health and Human Services
to negotiate prices for Medicare's prescription drug plans using 120% of the international average as a price ceiling. If negotiations failed, the federal government would tax pharmaceutical companies' profits 100% for every dollar
the price exceeded the international reference price.
‘An Already Inadequate Mini-Negotiation Bill’
Simultaneously, an initial draft of the bill in 2019 set a minimum of 25 prescription drugs subject to the new negotiation parameters, effectively guaranteeing that prices for a fraction of the most expensive drugs would drop. The Congressional Progressive Caucus threatened to derail the party-line bill, prompting Speaker Pelosi to raise the minimum of negotiable drugs to 50.
Nonetheless, many progressives see the bill in its current form as a significant compromise, making proposals to weaken it even more objectionable.
“Consumers need comprehensive action to lower prescription drug prices and rein in Big Pharma’s monopoly
power, not further attempts to weaken an already overly narrow mini-negotiation bill,” said Rep. Lloyd Doggett (D-Texas), chairman of the House Ways and Means Committee’s health subcommittee.
According to the nonpartisan Congressional Budget
Office, the bill would cut federal government spending by $456 billion over ten years while raising $45 billion in new revenue.
The CBO also predicted that by reducing drug makers' profits, the legislation would have a minor impact on the number of drugs developed by the pharmaceutical industry, with companies developing
eight fewer drugs than they would have otherwise, over the first decade of the law's implementation.
Because of the lack of consistent social value in the types of drugs that the pharmaceutical industry considers profitable to develop, affordable drug advocates argue that even that figure overstates the potential negative impact of price negotiation. For example, the World Health Organization
has warned that drug makers are not developing enough new antibiotics to combat the growing number of antibiotic-resistant bacteria.
Furthermore, the pharmaceutical industry frequently devotes resources to copycat, or “me-too,” drugs that make cosmetic changes to existing remedies in order to lock in the lucrative profits afforded by a new patent. Two particularly infamous examples are the acid reflux drug Nexium and the cholesterol drug Crestor, both of which data suggests do not provide significantly different results than much cheaper drugs.
“In the current system, where we allow drug companies to charge whatever they want for their products, that incentivizes companies to invest in the ways that they can make the most money the quickest,” Kesselheim explained, “which usually involves tweaks to currently available molecules, new formulations of existing products, and other copycat techniques that aren’t truly clinically valuable.”
H.R. 3 will actually “improve” innovation by creating more socially oriented incentives to guide
innovation, according to Kesselheim. A study co-authored by Kesselheim that measured the impact of a similar bill passed in Germany in 2011 found that 98% of drugs that added positive value remained on the market after the law’s passage, while 25% of drugs that did not added positive value left the market.
“The goal of H.R. 3 is not to simply lower prices at random, but to ensure that prices are more aligned with the clinical benefits of the drug, in which case we will give better pricing signals to drugs that are more meaningful, and less good pricing signals to drugs that are not more meaningful,” he added.
Rent-seeking by bad actors
in Big Pharma would be unabated by international reference pricing.
Some progressives are skeptical of international reference pricing because they believe it does not go far enough, claiming that European countries overpay for drugs.
“It may be higher than necessary, but it’s an absolutely quantifiable number,” said Cathy Hurwit, a former Capitol Hill aide who now advises progressive groups working to lower drug prices.
However, Auchincloss maintains that international reference pricing will stifle innovation and have the effect of importing the flaws of the European system, such as the slow COVID-19 vaccine rollout and distribution process. He insists that he is simply fighting for a “more progressive” prescription drug bill that will reduce prices while not jeopardizing treatments for Alzheimer’s disease and Parkinson’s disease.
“International reference pricing would not rein in rent-seeking by bad actors in Big Pharma; it would severely impede drug development, particularly for Alzheimer’s disease, cancer, and other complex medical conditions; and it would absolve payers of responsibility for rising out-of-pocket costs for patients,” Corridoni said.
“While the federal government is a major funder of basic research, it is unable to fill the pipeline
for translational research, which is critical to getting medicines to patients,” Corridoni added.
Corridoni referred Stardia to two studies to back up her claims. The first, conducted by the Vital Transformation consultancy with funding from PhRMA and other industry groups, concluded that the bill would reduce the number of market-ready products manufactured by “emerging biotech companies” from 64 to eight.
The second study is a simulation conducted by the University of Texas Southwestern Medical Center and sponsored by, among others, RA Capital Management, a pharmaceutical-focused investment firm. Peter Kolchinsky, RA Capital's founding partner and a donor to Auchincloss' reelection, was one of several judges
who assessed investment pitches from teams of graduate students
operating under a simulated environment
“In the end, price controls killed the investment in R&D that was actually possible and forced teams to make promises they couldn’t keep,” Kolchinsky said.