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Illustration: Lazaro Gamio/Axios

The pharmaceutical industry is voicing opposition to the latest drug pricing deal.

Yes, but: The details matter. And the details as they stand suggest drug companies would still retain the power to set prices, and most drugs wouldn't be subject to government price negotiations.

What they're saying: Stephen Ubl, head of industry lobbying group PhRMA, said in a statement the current proposal "gives the government the power to dictate how much a medicine is worth and leaves many patients facing a future with less access to medicines and fewer new treatments."

Between the lines: The deal currently on the table is not close to the more stringent Medicare price-setting bill passed by House Democrats.

  • The $2,000 out-of-pocket cap for Medicare patients is exactly what drug companies wanted and likely would lead to more drug sales since patients wouldn't face prohibitively high costs at the pharmacy counter.
  • For patients that reach Medicare's catastrophic drug coverage phase, insurers would shoulder 60% of the tab, while drug companies would cover just 20%.
  • The proposal also includes an inflation rebate on companies that raise drug prices faster than inflation, but that could be "inconsequential for the industry" if the inflation rate continues to hover around 5%, drug analysts at SVB Leerink said in a note earlier Tuesday, based on a conversation with several D.C. drug policy experts. The rebate also was pegged to 2021, which would lead to less savings.
  • The government would only negotiate prices on "single-source drugs outside of their initial exclusivity periods," which was set at nine years post-exclusivity for small-molecule drugs and 12 years for more complex biologics.
  • "The average commercial life before generic entry is estimated at 10-12 years," so the legislation may not cut that much into some drug sales, Bernstein pharmaceutical analyst Ronny Gal wrote in a note to investors Tuesday.
  • The first federal negotiated drug prices wouldn't go into effect until 2025 — plenty of time for lobbyists to further delay or kill the policy, and plenty of time "to adjust business models to negate meaningful impacts on earnings," pharma analysts at Raymond James wrote Tuesday.

The bottom line: The specific legislative text is important, but many industry analysts, like Gal, view this as a compromise that "seems designed to let legislators claim an achievement while granting pharma protection."

Go deeper

Nov 17, 2021 - Health

Drug overdose deaths top 100,000 for first time

A map of downtown Los Angeles in the city's Center for Harm Reduction with blue pins representing overdose reversal and red pins showing overdose fatalities as of Sept. 28. Photo: Al Seib/Los Angeles Times via Getty Images

An estimated 100,306 people in the United States died from a drug overdose in a 12-month period ending April 2021, according to new provisional data released by the Centers for Disease Control and Prevention Wednesday.

Why it matters: It's the first time drug overdose fatalities reached six figures in a 12-month period and signals that the country is on track to set another tragic milestone after reporting a record 93,331 drug deaths in 2020.

Food delivery "ghost kitchens" face major obstacles

Photo: Jakub Porzycki/NurPhoto via Getty Images

The growing popularity of food delivery has given rise to startups that open "ghost kitchens" — kitchens in warehouses or trailers that prepare food solely for delivery and have no option to dine in.

  • But they can come with a whole host of problems.

The big picture: The concept of "ghost kitchens" has been dubbed the next big thing in the future of services, with high profile backers like Uber founder Travis Kalanick. But these kitchens can be hard to run or unsafe.

11 mins ago - Health

Federal judge blocks Biden vaccine mandate for health workers

President Biden delivers remarks on the Omicron COVID-19 variant at the White House on Nov. 29. Photo: Anna Moneymaker via Getty Images

A federal judge on Tuesday blocked the Biden administration from enforcing a coronavirus vaccine mandate for health care workers at federally funded facilities nationwide.

The big picture: The order comes one day after a federal judge in Missouri halted the mandate, which has a Jan. 4 deadline, in 10 states.