Political Environment Where Drug

Innovation and Affordability Can Coexist

Joseph Newswander

Dr. Jane Bogart

Health Advocacy Case Study

May 22, 2023

Putting the Pieces Together: Fostering a

Political Environment Where Drug

Innovation and Affordability Can Coexist

Illustration via iStock

Prescription drug affordability is all over the place. Someone with good insurance or minimal

prescription needs may disregard the importance of controlling drug costs and argue that

those with high drug costs should simply obtain better insurance coverage. The truth is that

everyone is affected by ever-rising drug prices through tax dollars and higher insurance

premiums. The populations most harshly impacted are those who resort to paying in cash for

their medications without private or public insurance or coupons. The cash price of drugs has

been on an exponential rise in recent years, far exceeding the rate of inflation. Several drugs

have increased by more than 500%, some over $20,000 in a single year (Bosworth, et al.,

2022).Those with insurance coverage or less direct means of paying for prescriptions are not

shielded from these increases. Increased drug prices are passed along to patients in the form

of higher insurance premiums, and even in cases where the patient does not pay directly for

their insurance, notably in higher copays but also with increased expense in the form of

reduced direct compensation for employer-sponsored plans and increased tax burden for

government-sponsored plans.

Specialty and brand name drugs account for 23.2% cents of each dollar spent on

insurance premiums, an AHIP study reported (Heath, 2018).

The direct effect this has on patients who require prescriptions is the most impactful. Around

80% of adult Americans take at least one prescription drug, but the majority do not have much

trouble affording them, as the most utilized medications are generic or low-cost drugs for

common conditions. The most affected by high drug costs are those with multiple or severe

conditions (Hamel et al. 2021).

The social cost of unaffordable prescription therapies is drastic. While the percentage of

Americans that have skipped or modified their treatment regimen against their physician’s

recommendation is not a major share of the population, the effects of medication non-

adherence cause over 100,000 deaths and account for “up to 50% of treatment failures…and

up to 25% of hospitalizations” annually, putting serious strain on our acute healthcare facilities.

“About Three In Ten

Say They Haven’t

Taken Their

Medication as

Prescribed due to

cost”

(Hamel et al. 2021)The greatest challenge to address this problem is arguably balancing the competing interests

of various parties involved, the most daunting of those being the anticipated lapse in

innovation critics of drug price controls cite. Facilitating comprehensive contextual research

and clinical trials is expensive, and drug companies commonly cite this as the reason for

progressively more exorbitant costs, typically far greater than any other country pays (Yu et al.

2017). The business risk of developing pharmaceuticals is not a falsehood; rather, the

magnitude of price increases correlated to research costs is greatly exaggerated. Despite the

purported research recovery costs, the largest pharmaceutical behemoths outpace the S&P

500 in pure profit (Ledley et al. 2020b).

‘Basic science’ funded by the federal government already provides a lot of valuable “scientific

capital” to new product development. (Ledley et al. 2020a). Drug companies leverage this

government research along with their existing revenue or investor capital and technical

production capabilities to bring the medication to FDA approval status. Wielding the third

largest lobbying budget in Washington (Statista, 2023) and a legal team to match, many drugs

undergo a durable patenting process, in which a single brand-name product has nearly 3.5

patents on average, while many of the top-selling products have hundreds. Each patent

extends the time and resources potential competition needs to challenge its monopoly.

The National Health Institute is empowered to

contribute to private industry by the Bayh-

Dole Act, “to promote the utilization of

inventions arising from federally supported

research or development; ….. ; to ensure that

inventions made by nonprofit organizations

and small business firms are used in a manner

to promote free competition and enterprise; to

promote the commercialization and publicavailability of inventions made in the United States by United States industry and labor; to

ensure that the Government obtains sufficient rights in federally supported inventions to meet

the needs of the Government and protect the public against nonuse or unreasonable use of

Inventions…”(Ledley 2020a). The bill’s objective necessitates the assurance that the profit from

publicly funded research does not become paramount to ensuring unreasonable use, including

nonuse, to which far too many Americans have resorted.

“The top-selling 250 drugs with one manufacturer and no generic or biosimilar

competitors accounted for 60% of net total Part D spending in 2019” (Cubanski

2021).

The Inflation Reduction Act of 2022 requires Medicare to negotiate prices for single-source

drugs, with certain exceptions below, repealing the non-interference clause previously

governing Medicare, preventing any negotiations between the federal payor and private

pharmaceutical enterprise. “Certain categories of drugs are excluded from the negotiation

process, including:

• Drugs that have a generic or biosimilar available

• Drugs that are less than 9 years (for small-molecule drugs) or 13 years (for biological products)

from their FDA-approval or licensure date

• “Small biotech drugs” (until 2029), defined as those which account for 1% or less of Part D or

Part B spending and account for 80% or more of spending under each part on that

manufacturer’s drugs

• Drugs with Medicare spending of less than $200 million in 2021 (increased by the CPI-U for

subsequent years)

• Drugs with an orphan designation as their only FDA-approved indication

• All plasma-derived products”

(Cubanski et al. 2023)

Medicare’s drug negotiation capabilities open the doors for a decrease in drug prices.

However, current shortfalls with the US Patent system are still prohibitive to fair competition to

encourage new affordable “non-obvious innovations” (Barrueta 2022) and to allow a pathway

for bio-similar equivalents to emerge. Relatively obvious patents are made on the most

profitable drugs, which allows for decades-long monopoly, drowning less-resourced startups inbureaucracy. The most recent significant legislative movement towards patent reform was

proposed almost a year ago, the Patent Trial and Appeal Board Reform Act of 2022. This bill

proposed to statutorily prohibit bad actors from maliciously overloading the system, allowing

appeal cases for any party involved, and supporting small businesses in the patent system with

legal fee subsidization. There has not been much progression of this bill published since its

introduction, which is disappointing as the proposal’s scope was reasonably mild compared to

the changes advocates for patent reform would like to see.

Several advocacy organizations have made strides in improving various aspects of prescription

drug development to access the pipeline, spreading awareness of the issues, and organizing

means for political influence. However, these efforts are often niche, such as only working

towards patent reform, only lobbying for a specific condition’s drug to be affordable, or for a

particular population. To see meaningful change that can positively impact as many people as

possible who have been hurt by a dysfunctional system and to the broader premium-paying,

tax-paying population regardless of health status, a greater coalition effort seems most

effective.

Examining the solidarity of likely opposition to such efforts and their motives is essential to

demonstrate the urgent need for a coalition in advocacy efforts. As mentioned, pharmaceutical

corporations are far more profitable than other prominent businesses and spend a large sum

on federal lobbying. However, upon closer inspection, the for-profit healthcare industry holds

an even more significant stake in policy and economics than pharma alone. Four of the ten

most funded lobbyists in Washington in 2022 are healthcare associations or interests, spending

just under $100M on federal lobbying alone last year. With consolidation among for-profit

healthcare industry giants increasing, who naturally favor political environments that favor profit

motive, it is clear that advocacy efforts that stand to threaten this must show a united front and

provide clear solutions to the hiccups that large industries insist on making healthcare

affordable prohibitive.Selected Advocacy Organizations

Initiative for Medicines,

Access, and Knowledge

Democratizing the Patent System

I-Mak’s objective is to balance the patent

system from an equity of involvement

standpoint. Since large pharmaceutical firms

hold disproportionate power and political

sway in patent law than individual innovators

or patients themselves, these large firms are

able to maintain monopolies and charge

prices irrespective of the cost of production.

Often times this cost is detached from the

real social value of the innovation because of

the sheer leverage of the exclusivity guarded

by regressive intellectual property provisions.

I-Mak’s proposed solutions are focused on

broadening the scope of stakeholders

involved in patent administration, allowing

competitors, patients, physicians, etc. to

challenge unfair patent protections that result

in negative health and economic outcomes

for the patients that need the medication.

National Organization for

Rare Disorders

Organizing and advocating for patients

affected by relatively rare diseases

NORD forms patient organizations to provide

community support and resources for

patients affected by rare and under-

researched disorders. These patient and

family groups provide social support as well

as education and networking with

researchers to drive treatment development

and connect eligible patients to clinical trials.

NORD’s policy advocacy is focused on

treatment development and affordability.

They claim an instrumental role in the

“passage of the Orphan Drug Act of 1983”.

Today they advocate for risk reduction for

treatment development and critique

affordability policies like the IRA on potential

barriers to future orphan drug development,

while simultaneously acknowledging the

importance of the affordability IRA delivers

on.

I-MAK makes it easy to learn about their

purpose and to donate. Their website is

lacking in community-based efforts or

voter mobilization they can facilitate.

Many of the major donors to NORD are big

pharmaceutical names, however NORD

displays a conflict of interest mitigation

statement on their website.

NORD makes it easy to attend events

and learn, join or start community

chapters, write legislators, as well as

donate.Actionable next steps in prioritizing the social value and affordability of prescription drugs

would likely involve an effective coalition between various community-based initiatives. To

address concerns about the risk of innovation increasing as laissez-faire drug pricing policy is

replaced, a realistic mitigation strategy must be proposed for further price reduction measures

to stand a chance in the current lobby-laden political climate.

Such a coalition could simultaneously advocate for patent reform, drug price controls, and risk

reduction for drug development. By allowing a community of professionals, patients, and

families to participate in a democratic patent system, drug prices could be more aligned with

their demonstrable social value, saving patients, insurers, and taxpayers money and

maintaining profitability for shareholder ventures. Drug price controls could utilize the

International Reference Point, a global index of drug prices paid by respective nations relative

to their overall GDP, as a starting point to swiftly inhibit current price-gouging and grant

immediate relief to households burdened by these practices.

Finally, the government can reduce the risk of drug development to ensure that new and

substantially improved therapies are economically viable for firms of all sizes. Existing

governmental organizations can coordinate, or as Conti et al. suggest (2021), a new,

interdisciplinary branch of administration could be formed to meet the need most effectively.

The interdisciplinary branch could leverage scientific and market knowledge and efficiently

administer affordable loans to small and mid-size firms for new drug development with subpar

profit outlooks. It could also coordinate with the FDA to foster a competitive environment in the

regulatory approval process and to ensure high-need drugs are not overburdened with

administrative costs that do not significantly improve safety. Another collaborative

administrative initiative could seek to prioritize federal funding for small businesses through the

SBA, as smaller firms have a 6x superior track record of novel molecule procurement per dollar

(Conti, et al. 2021). A multi-faceted approach to drug pricing and innovation is necessary to

make clear the long-term viability of affordable prescription therapies.References

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