trending Market Intelligence /marketintelligence/en/news-insights/trending/fLhP7aVYrEz1jHFf4fcX6A2 content esgSubNav
In This List

PhRMA says Pelosi bill will trigger 'nuclear winter,' CBO projects $345B savings


Japan M&A By the Numbers: Q4 2023


Essential IR Insights Newsletter Fall - 2023

Case Study

A Corporation Clearly Pinpoints Activist Investor Activity


Insight Weekly: Bank mergers of equals return; energy tops S&P 500; green bond sales to rise

PhRMA says Pelosi bill will trigger 'nuclear winter,' CBO projects $345B savings

If House Speaker Nancy Pelosi's legislation aimed at lowering drug prices is enacted, it would trigger a "nuclear winter" for the U.S. biopharmaceutical ecosystem, Stephen Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of America, said last week.

SNL ImagePhRMA CEO Stephen Ubl
Source: AP Photo

If the bill, the Lower Drug Costs Now Act (H.R. 3), becomes law, it would be "lights out" for small biotech companies, whose capital would dry up, Ubl told reporters during an Oct. 10 briefing at PhRMA's headquarters in Washington.

PhRMA estimated that drugmakers would lose $1 trillion over the next 10 years under Pelosi's bill.

"We see the Pelosi package as an innovation killer, as a job killer and ultimately a hope killer for American patients who are waiting for better treatments and cures," Ubl said.

He said PhRMA estimated that Pelosi's home state of California alone would lose 140,000 jobs if her bill was implemented.

Pelosi's legislation, unveiled Sept. 19, would allow the federal government to set a maximum price on at least 25 medicines and up to 250 that lack competition in the U.S., with Medicare beneficiaries paying no more than $2,000 out of pocket each year for their drugs.

A key part of the bill relies on the prices set by foreign nations to gauge what the U.S. would pay for its medicines — a provision that mirrors a pending proposal from the Trump administration.

Ubl said PhRMA also opposes a bipartisan bill adopted in July by the Senate Finance Committee.

The PhRMA chief said the industry was ready to work with lawmakers on both sides of the aisle on a "balanced package" to lower Americans' prescription drug costs and now supported "issues that have divided" the sector in the past, like the CREATES Act, which would ensure that manufacturers of generics could access the samples of brand-name medicines they need to complete their bioequivalence studies for U.S. approval.

Rep. Lloyd Doggett, D-Texas, chairman of the Ways and Means Health Subcommittee, said that for Ubl to describe Pelosi's bill as producing a nuclear winter "makes one wonder what cataclysmic term would be applied to genuinely comprehensive negotiation legislation."

SNL ImageHouse Speaker Nancy Pelosi
Source: AP Photo

"This grim term better describes the fallout from monopoly prices which patients are suffering," Doggett said in an Oct. 10 statement.

Flawed talking points

In an Oct. 11 op-ed in Stat News, Peter Bach, director of the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center in New York, said the talking points PhRMA has been distributing on Capitol Hill aimed at discrediting Pelosi's bill fail to note that many of the top selling prescription medicines in the U.S. are made by companies based overseas.

"The pharmaceutical industry is global and our overpaying for medications in the U.S. explains no more of New Jersey-based Merck's successes than it does of Takeda's, half a world away," Bach wrote.

CBO, CMS analysts project savings from Pelosi bill

Meanwhile, the Congressional Budget Office said H.R. 3 would save the Medicare program $345 billion between 2023 and 2029. Premiums for beneficiaries in the Medicare Part D prescription drug program would also be lower if the bill became law, the CBO said in a preliminary analysis reported on Oct. 11.

But the CBO also said the bill would result in a drop in drug industry revenues of up to $1 trillion over the next 10 years, possibly leading to a reduction of eight to 15 new drugs coming to market.

Democrats praised the analysis' projected savings, while Republicans' condemned the legislation's potential impact on new drugs.

"This initial analysis proves that H.R. 3 will effectively rein in the soaring cost of prescription drugs and level the playing field for American patients," said Reps. Frank Pallone, D-N.J., Richard Neal, D-Mass., and Bobby Scott, D-Va., the chairmen of the House Energy and Commerce, Ways and Means and Education and Labor Committees, respectively, said in an Oct. 11 statement.

Kevin Brady, R-Texas, ranking member on the House Ways and Means Committee, however, said House Republicans would reject the Pelosi bill and called on the speaker to come back to the table to work on bipartisan legislation.

SNL ImageRep. Kevin Brady
Source: AP Photo

Rep. Greg Walden, R-Ore., ranking member on the Energy and Commerce Committee, said the "rushed" CBO preliminary estimates provided a "less than a full picture" of the Pelosi bill.

But Pelosi noted that the Office of the Actuary for the Centers for Medicare and Medicaid Services found that her bill would save U.S. households $158 billion and private businesses $46 billion from 2020 to 2029.

Overall U.S. spending on health costs would drop by $481 billion over that 10-year period, the CMS analysts said.

"When we negotiate for fair drug prices, we put money back into the pockets of seniors and families, reduce insurance premiums and improve the personal and financial health of the American people," Pelosi said in an Oct. 11 statement.