After Big Pharma lobby groups suffered a major drug pricing blow earlier this year with the passage of the US Inflation Reduction Act (IRA), pharma industry heavyweight AbbVie is withdrawing its membership to leading industry trade groups PhRMA and BIO.
AbbVie Bows Out
AbbVie is leaving both of the major trade organizations that represent the interests of the pharma industry in Washington— the Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO)—and also exiting the Business Roundtable association of chief executives, according to Politico.
The company did not provide the rationale behind its decision, stating simply that: “We regularly evaluate our memberships with industry trade associations and our most recent assessment led us to decide not to renew our membership with select trade associations.”
Yet it is difficult not to associate the move with the recent defeat of the industry’s leading lobby groups when the Inflation Reduction Act was passed in the United States earlier this year. The new legislation will allow Medicare, the federal health insurance program for Americans over 65, to negotiate certain drug prices, something PhRMA specifically has been lobbying against for over a decade.
AbbVie CEO Richard Gonzalez demonstrated his resistance to the IRA along with 30 other pharma industry chief executives shortly before the new legislation was passed, signing a letter that said the bill was an “attack on medical innovation.” Moreover, Gonzalez claimed that it would force drugmakers to accept the government’s proposed pricing, making the IRA not a negotiation process, but out-and-out price control.
After the IRA was signed into law, PhRMA CEO Stephen Ubl said in a statement that it would “lead to fewer new treatments and doesn’t do nearly enough to address the real affordability problems facing patients at the pharmacy.”
With respect to bringing new treatments forward, the industry was quick to blame the Medicare negotiation part of the bill for its impact on R&D. Bristol Myers Squibb CEO Giovanni Caforio went so far as to tell the Financial Times that the company would cancel some of its programs in direct response to the IRA while AstraZeneca CEO Pascal Soriot claimed the new law would delay the development of new medicines.
Regarding affordability, the biopharma industry has asserted that the IRA will do nothing to tackle the drug spending filtered through insurers and other middlemen who negotiate discounts and access. According to the industry, the bill does not include any measures for commercially insured patients or changes to rising drug rebates.
In a 2022 PharmaBoardroom interview, Stephen Ubl spoke about the impact of these intermediaries: “Many for-profit entities are benefiting … at the expense of patients. These entities include large hospital systems, pharmacy benefit managers (PBMs), and contract pharmacies.
Since the initial upheaval when PhRMA said the industry lobby group was looking at ways to challenge the IRA and spokesperson Sarah Sutton stated that the organization would “explore every opportunity—including legislative, regulatory and legal—to make sure patients have access to the medicines they need and our industry can continue to develop lifesaving cures and treatments,” PhRMA has not, as of yet, taken any decisive action.
As the new law moves closer to becoming a reality, it remains to be seen how the pharma industry as a whole, its lobby groups and individual companies like AbbVie will look to counter its impact.
Initial measures set out in the IRA are due to take effect in 2023 when drug makers will begin paying rebates to Medicare if they raise prices beyond the rate of inflation. Starting in 2024, the law will cap out-of-pocket spending for Medicare patients at USD 2,000 per year and as of 2026 certain drugs, the top ten by sales volume, will be eligible for pricing negotiations.