The U.S. pharmaceutical industry’s principal lobbying group spent a record $27.5 million in 2018 as it contested a bruising series of drug-cost fights. That beat a previous high set in 2009 during the thick of the debate over the Affordable Care Act, and the biotech lobby hit a new spending mark as well.
But you haven’t seen anything yet. Those records are likely to be shattered in 2019, which is shaping up to be an even more consequential year for drug pricing.
A portion of last year’s spending by the Pharmaceutical Research and Manufacturers of America was focused on combating a bipartisan plan to make pharmaceutical companies pay a larger share of Medicare drug costs. Industry funds also went to counter the Trump administration’s efforts to rein in prices, and to various pharma-friendly platforms and Congressional candidates leading up to the midterm elections.
The first issue was settled last year against drugmakers. The decision, one of pharma’s biggest Congressional failures, put drugmakers on the hook for billions in additional Medicare payments — and notably, it came when traditionally industry-friendly Republicans controlled the whole government. Now, pharmaceutical companies face greater threats.
President Donald Trump’s initial drug-pricing plan released last May wasn’t all that scary, but the administration’s stance has toughened since then. In October, it proposed linking the price Medicare pays for drugs to the much lower prices paid in other nations. It was an unexpectedly aggressive plan and came on top of other potentially costly tweaks to regulations and government programs.
The administration’s efforts will move much further along the path from proposal to actual policy in 2019. The industry will fight many of them at every step. As for Congress, after Democrats seized control the House of Representatives, they’ve have made it clear that drug pricing is a priority, introducing aggressive legislation, launching a major pricing investigation and scheduling a Jan. 29 hearing to interrogate industry officials. Pharma isn’t off the hook in the Republican-controlled Senate, either: Finance Committee chair Chuck Grassley has introduced drug-pricing bills of his own and also scheduled a Jan. 29 drug pricing hearing. This concerted if uncoordinated series of efforts is a reminder that drug pricing has become one the few truly bipartisan issues.
All of the above is enough to set the industry on course for a budget-busting year of lobbying. But 2019 also brings the real beginning of the 2020 presidential campaign. Challengers are pouring in to the Democratic primary with a variety of drug-pricing and health-care aims. Some will push for Medicare-for-All type plans, others for something closer to Medicare-for-More. Either path is threatening to the pharmaceutical industry, which usually makes more money when the private sector buys drugs.
Any Medicare expansion will involve a hard look for cost savings; drug prices will be a popular place to start. More ambitious plans will require bigger savings. The threat remains distant, but the industry can’t be disengaged. All it takes it money.
Max Nisen is a Bloomberg Opinion columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.