Charlie Baker is not punishing drug company success by challenging costs
Big Pharma is getting very annoyed with Governor Charlie Baker. Good for Baker.
His plan to rein in the cost of prescription drugs in the state Medicaid program will “punish success,” complained Robert K. Coughlin, president and CEO of the Massachusetts Biotechnology Council, which represents 1,200 biopharma companies.
With that, Coughlin ignores the different meanings of success. In the drug industry, it includes breakthrough medicines that mean the difference between life and death — but also stratospheric price tags that enrich their inventors, marketers, and lobbyists.
Coughlin has a highly personal stake in the success of breakthrough drugs. His 16-year-old son, Bobby, has cystic fibrosis, a rare genetic illness. As the Globe’s Jonathan Saltzman recently reported, Boston-based Vertex Pharmaceuticals is on the cusp of winning approval for a new experimental medicine that might help Bobby Coughlin. Of course, that’s an outcome anyone would celebrate, for Coughlin’s son or other sufferers of such a terrible disease.
But rooting for medical miracles should not blind us to the other side of the equation: the rising cost of prescription drugs, amplified by well-documented examples of industry greed. Coughlin defends drug pricing generally on the grounds that drug development is expensive and drug companies reinvest the money they make into research. In a recent opinion piece in the Globe, he also expressed concern that the state’s poorest residents would be hurt by Baker’s attempt to “use strong-arm tactics to compel so-called voluntary reductions from drug manufacturers.”
If Massachusetts embraced health care policy that denied the poor access to life-saving medicine in order to save money, that would be wrong. But that’s not what Baker is proposing.
A previous Baker proposal would have allowed MassHealth to exclude certain expensive drugs from what is available to MassHealth patients. However, doing that requires federal approval, which was denied. This latest proposal doesn’t limit access. According to a Baker administration official, it basically asks drug manufacturers to work with the state on price. If they’re not willing to do that, the drug company would be called before the Health Policy Commission to show why they are charging what they charge. If the commission decided the price is unreasonable, it could refer the case to the attorney general’s office for investigation under state consumer protection law. Hospitals that want to merge must justify any costs associated with it. Why shouldn’t there be equal transparency for drug companies?
This proposal gives the drug companies a chance to lay out R&D costs — along with other ancillary expenses, like their record-setting lobbying. According to OpenSecrets.org, a lobbying spending database, annual spending on lobbying for pharmaceuticals and health products in Washington totaled $280 million in 2018. The Pharmaceutical Research and Manufacturers of America accounted for $27 million of that spending. Lobbying takes place at the local level, too. In 2017, MassBio paid Coughlin $774,114, the Globe reported. For that compensation, he lobbied for state tax incentives and against government efforts to limit drug prices. According to the Office of Campaign and Political Finance, in 2018, MassBio contributed $500 to Baker and $500 to Lieutenant Governov Karyn Polito.
After winning a landslide reelection to a second term, Baker, a Republican, has gone bold or rogue, depending on your perspective. He’s pitching this drug-pricing measure, plus a 15 percent excise tax on sales of prescription opioids. The $14 million he estimates the tax would generate could be used to “address the significant and growing state costs associated with opioid misuse,” he told lawmakers. That’s one kind of accountability.
Now, imagine if pharmaceutical executives were also required to explain and justify their prices — directly to the public. That doesn’t punish success. It gives the industry a chance to show what it takes to make it happen.