Drug Lobby Plans Counter A Post-Election Ad War On Drug Prices
By SARAH KARLIN-SMITH for PoliticoÂ
Washington’s powerful drug lobby is gearing up to spend hundreds of millions of dollars on a post-election ad war pushing back against politicians from both parties who have savaged its members over drug prices.
The massive campaign by the Pharmaceutical Research and Manufacturers of America — expected to start positive by highlighting drugs that save or prolong lives — will dwarf the $20 million that health insurers spent on the iconic “Harry and Louise” campaign credited with sinking Hillary Clinton’s health reform plan in the early 1990s.
Targeting politicians is not part of the initial plan, but lobbyists say the organization is prepared to do so if members of Congress or the executive branch push agendas that are seen as detrimental to the industry.
And that’s just one part of a larger effort by the K Street lobbying powerhouse to seize control of the public narrative over drug prices and to reassert its dominance in Washington after several years in which it has taken a public shellacking over prices, with even reliable political allies in Congress questioning its pricing strategies. Both Clinton and Donald Trump, for instance, are urging changes in the law that would allow the government to negotiate drug prices for Medicare beneficiaries.
PhRMA wants to drive a broader discussion on health costs, emphasizing that other players must play a role in tamping down costs and offering to work with insurers and others to find solutions, senior company officials and lobbyists said.
“The reality and the message and the playbook used for a number of years is over,” said Bill Pierce, senior director of the public affairs firm APCO Worldwide, which represents several drug companies, and a former HHS official under President George W. Bush.
The industry can no longer defend high drug prices by pointing to the pricey research and development that goes into innovative medicines. “They have to move on,” he said.
The perception among drug industry insiders is that the pharmaceutical lobby let its guard down six years ago after getting a lot of what it wanted in Obamacare — and keeping out what it didn’t. But in the last few years, it was blindsided by organized campaigns against high drug prices and growing public alarm about the cost of medicine. Public outrage has been stoked by the eye-popping costs of breakthrough drugs such as a new generation of hepatitis C cures, pharmaceutical companies’ attempts to merge with firms overseas to avoid U.S. taxes, and former pharmaceutical CEO Martin Shkreli’s decision to hike the price of a drug relied upon by AIDS patients by more than 5,000 percent.
“The ground has shifted underneath the industry from where it was five years ago, certainly 10 years ago, but I even think in the last two years,” Pierce said.
By DAN DIAMOND
Drug companies are used to Democrats attacking prices, but Republicans are also starting to chide the industry for large hikes on old drugs and raising concerns about the financial burden that prescription drugs place on entitlement programs.
Just last week, Sen. Chuck Grassley (R-Iowa) expressed concern that drug companies “might be exploiting” Medicare’s prescription drug benefit “to maximize their market share.” The program’s catastrophic coverage requires the government to pick up the tab for most patients’ drug costs after $4,850 per year — spending which has increased by 85 percent in three years.
Those and other calls — including the demand by both presidential candidates that Medicare negotiate drug prices — have awakened a sleeping giant, which routinely spends more on lobbying than any other health care group and took in more than $200 million in member dues in 2014, compared to about $80 million for the American Hospital Association and about $41 million for America’s Health Insurance Plans.
The group’s playbook for 2017 includes adding new members, raising dues and retooling a lobbying machine that insiders say atrophied since PhRMA achieved many of its top goals with Obamacare’s passage. Now it’s ready to shout its message not just inside the corridors of power but beyond the Beltway.
PhRMA has already flexed its muscles this year, fighting back against the Obama administration’s proposal to lower payments for some high-cost drugs administered in doctor’s offices. The Hill blowback — which has come from some Democrats as well as Republicans — has demonstrated how difficult it will be for a future White House to enact drug pricing legislation, especially now that industry is getting a head start.
PhRMA’s board this summer added Teva, the world’s largest generic company, to its ranks, along with Alexion Pharmaceuticals and Jazz Pharmaceuticals. It also elevated Horizon Pharma and AMAG Pharmaceuticals to full members and raised dues on all companies.
“The combination of new voices and resources will also bolster our efforts to engage with all stakeholders and advocate for proactive policies that promote continued medical progress,” said PhRMA CEO Stephen Ubl.
Industry insiders and lobbyists say the trade association is also looking to add more companies as members, including big-name players like Gilead — the maker of costly hepatitis C drugs that helped spur public backlash over prices — and Genentech. Representatives from the companies attended the July PhRMA board meeting, the two companies said
PhRMA’s dues are based on companies’ sales, so adding Gilead and Genentech would be a huge boost for the lobby group. Gilead took in more than $15 billion in the first half of the year, while Roche — Genentech’s parent company — had $19.5 billion in drug sales during this period.
Officials would talk about the ad campaign only in broad terms, but the tone is expected to be positive, like the Washington-centric “Hope to Cures” effort which is currently airing. Those advertisements — featuring soothing music, cancer survivors and scientists — focus on the added years of life new drugs have provided to patients and convey patients’ optimism for a plethora of treatments still in development.
The ads are also expected to convey messages similar to those in Pfizer’s new campaign, which chronicles a drug’s journey from concept to medicine cabinet. The group wants to highlight that it takes dozens of years, the overcoming of multiple setbacks and complex clinical trials — in other words, lots of money — to develop a drug.
PhRMA is also meeting with political and industry insiders who will shape policy on drug prices. In July, the PhRMA board met with Clinton health policy adviser Chris Jennings, Anthem CEO Joe Swedish, Republican health economist Gail Wilensky and Steve Pearson of ICER, a research organization that analyzes the cost-effectiveness of drugs.
PhRMA last month also met with Republican leaders in Congress, including Speaker Paul Ryan and Majority Leader Kevin McCarthy. A GOP lobbyist described the meeting with Ryan, which took place at an industry dinner, as the start of a conversation.
By SARAH KARLIN-SMITH
Some warn the new initiative as the potential to backfire.
“Their actions will be judged, more than their words,†said Clinton health care adviser Jennings. “If they advertise in ways that they are denying the existence of a problem, or attacking people who are raising legitimate concerns on behalf of consumers and purchasers and businesses, and don’t engaging substantially on addressing the challenge, then they won’t be well received.â€
Jennings said Ubl, the PhRMA CEO, is “trying to send us a signal he wants to engage” on solutions for drug costs. But Jennings is worried that PhRMA’s growth will make the lobby even more powerful.
“They are formidable under any scenario. They are formidable now,” Jennings said. “The idea that they are going to bring in more resources, borders on petrifying.”
The challenge for PhRMA will be whether it can convince detractors the industry is not simply building up a bigger war chest to crush any policy proposal seen as undercutting its own agenda.
“They talk a good game. … But when push comes to shove, they are not willing to budge on their public positions or their policy positions so it’s hard to give them any credit whatsoever,” said Topher Spiro, the vice president of health policy at the left-leaning think tank, Center for American Progress.
Spiro pointed to industry’s strong opposition to Medicare’s recent proposal to pay less for the most expensive physician-administered drugs.
“I think that this is all going to come to a head at some point over the next year or so,†he said, “so we’ll have to see if the drug industry wants to be seen as cooperative or as digging itself in.”
Jennifer Haberkorn contributed to this report.
Read more: http://www.politico.com/story/2016/08/drug-lobby-gears-up-for-massive-pr-campaign-226646#ixzz4GV5wr93u
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