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PhRMA looks to pivot cost debate post-IRA

Illustration of a turn over pill bottle the pills forming an upward trending arrow

Illustration: Sarah Grillo/Axios

PhRMA suffered a significant loss with the Inflation Reduction Act's moves to tackle drug prices. But with that law now on the books, the group sees more room to shift the focus to other parts of the health care system.

What they're saying: "I do think there's an opportunity to have a broader discussion" about the role that PBMs, insurers and hospitals have in pricing without "having to fight this enormous battle around drug prices in the context of the IRA," PhRMA CEO Steve Ubl told Axios on Wednesday.

What does that mean? For one thing, PhRMA has long pushed for PBMs and insurers to share the discounts they get with patients, saying patients should pay based off the negotiated price of a drug, not the list price.

  • And hospitals, the group notes, make up a much bigger share of overall health spending than drugs do.

Between the lines: PhRMA has been in the spotlight as Democrats pushed for Medicare to negotiate drug prices, a policy very popular with the public in polls. Other health industry players always point out that drug companies are the ones that set the list price in the first place, and they are free to lower it.

  • There is now space for action in other areas, and bipartisan scrutiny is indeed growing on PBMs. But it's far from clear that any proposal can make it across the finish line in a divided Congress. Hospital scrutiny is also growing, though they still have the advantage of close local ties to members of Congress.
  • Ubl said PhRMA is going to "relentlessly educate policymakers" about "misaligned incentives" in the system.

IRA fight not over: That's also not to say PhRMA has given up the IRA battle.

  • "We're not taking any tool off the table," Ubl said when asked about legal action on the IRA.
  • PhRMA is also pushing to close the disparity in the IRA between small molecule drugs getting nine years of exclusivity before negotiations begin, and biologics getting 13 years, saying the system is harming innovation in small molecule drugs.
  • Ubl acknowledged that change is more likely in a future Congress, not the current one. "I think we need to develop the evidence base that this is having an adverse impact on innovation, and educate policymakers who I don't think were thinking about this dynamic at the time they passed the law," he said.
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