Today marks the conclusion of the annual J.P. Morgan Healthcare Conference, known as the biotechnology industry’s Super Bowl. Thousands of executives and investors have gathered to sniff out, and make deals with, each other, all while schmoozing at dozens of wine-and-dine receptions. The industry describes the week as one of innovation: advances in gene therapy, cancer treatments, non-traditional routes to conception. (In these circles, innovative doesn’t always equal socially progressive—see, for example, how a major financial communications firm for life science companies thought it appropriate to balance the gender ratio at one of its parties by hiring female models to hang around.)
But, this year, the most prominent public narrative has focused on a decidedly different subject: drug costs. Between citizen rallies against drug prices, consumer advocates joining lawmakers to urge reform, and presidential candidates gaining momentum by accusing corporations of putting profit before patients, people are talking—often angrily—about Big Pharma’s role in rising health-care costs.
Pacific Standard has reported before on the arbitrary nature of drug pricing, a problem that is hard to puncture through regulatory law. But despite the increasingly loud public outcry against drug prices—with protestors crashing the JPMHC to oppose the $84,000-per-treatment price of Gilead Sciences’ trailblazing hepatitis C drug—pharma executives seem content with their approach to the market.
Ron Cohen, chairman of industry leader BIO, labeled public anger toward drug companies an “abomination.”
Just this week, a number of executives lashed back with claims that the 77 percent of Americans who want the affordability of high-cost drugs for chronic conditions to be a top legislative priority are, essentially, crying over spilled milk. As STAT reports, Ron Cohen, chairman of industry leader BIO, made waves at JPMHC when he labeled public anger toward drug companies an “abomination.” That same day, Gilead President John Milligan dismissed the outrage as “more of a campaign issue than an actual issue.”
A number of lawmakers aren’t buying that. California and Ohio are pushing forward ballot measures to require that their state programs—including Medicare and prison systems—pay no more for medicines than does the Department of Veterans Affairs, which receives a 24 percent discount and is free to further negotiate down prices. As of now, Medicare is not allowed to negotiate prices for older Americans and those with disabilities. California also has the promise of a bill to increase the transparency of prescription drug pricing. The bill was pulled from the state assembly Tuesday, but its champion, Assemblyman David Chiu, has vowed to bring it back.
Drug companies have also landed in hot water recently for tax inversion—acquiring overseas firms to artificially place headquarters abroad, as a means of benefiting from other countries’ lower corporate tax rates. In fact, the biggest merger announced so far at JPMHC involved a company that’s been accused of participating in just that.
Irish company Shire bought Illinois-based drugmaker Baxalta, with plans to lead the globe in drug treatments for rare diseases. The last time Shire made a big splash in the news, though, was when the Obama administration killed the purchase of Shire by a different Illinois-based company, AbbVie. That the tables have turned—the Irish company ended up buying an American one—gives life to concerns that the Treasury Department’s latest anti-inversion measures provide foreign companies an advantage over American ones, which are now more restrained in their options to buy up foreign firms, and must therefore continue to pay higher taxes. Corporate tax law also tends to operate as a cat-and-mouse game, researchers have found: When the government adds a regulation, corporations find ways to beat it. That’s one rebuttal to Hillary Clinton’s proposal to cut back inversion further—it’s a Band-Aid on a bigger profit problem.
Either way, this year’s biggest JPMHC developments show the fight against steep pharma profits will find reason to continue—against drug pricing within states, and against convoluted corporate tax law at the federal level. “Innovation” will probably keep meaning less to most Americans than “costs.”
