With tens of millions on hand, drug makers fight state efforts to force down prices

SAN FRANCISCO — Drug makers are sick and tired of coming under attack for high prices.

And they’re spending tens of millions to try to make it stop.

“We’re under unprecedented pressure because there really is profound misunderstanding out there,” Acorda Therapeutics CEO Ron Cohen, who chairs the industry trade group Biotechnology Innovation Organization, told a crowd at BIO’s conference here this week.

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“Together we’re going to fight back, and we’re going to win,” Jim Greenwood, the CEO of BIO, said in his keynote address.

Bills that would have required drug companies to justify, explain, or even cap their prices have faltered in about a dozen states in recent months. Last week, however, brought two blows to the industry: Vermont Governor Peter Shumlin signed into law a transparency act that requires drug makers to justify price hikes. Similar legislation passed in the California state Senate.

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Meanwhile, the industry is girding for another California fight this November over a ballot measure that seeks to cap some drug prices. A similar measure is in the works in Ohio. And the industry fears such ballot measures could pop up elsewhere.

But drug makers aren’t responding by cutting prices — or even by keeping them stable.

Pfizer just hiked its drug prices by an average of nearly 9 percent. That’s on top of a 10 percent hike just six months ago.

Both Johnson & Johnson and Amgen have boosted the price of rheumatoid arthritis drugs by nearly 30 percent in the past year and a half. Biogen raised the cost a multiple sclerosis drug by 18 percent. And prices on dozens of other drugs have risen risen more modestly.

Overall, list prices for brand-name medicines sold in the United States climbed more than 14 percent last year, according to Truveris, a market research firm.

Playing whack-a-mole

Greenwood didn’t address that issue in his keynote at BIO, beyond saying that drug prices “aren’t rising nearly as fast” as insurance deductibles and co-pays. The drug industry, he said, had become an “easy scapegoat.” Among its responses: Opening a “rapid response shop in Washington to beat back misinformation.”

It’s looking beyond D.C. politics, too: BIO on Monday put out an open letter urging Californians to “reject scare tactics” by voting against the pending ballot measure, which mandates that state-funded programs pay no more for prescription drugs than the US Department of Veterans Affairs.

Opponents of the measure have amassed a war chest of about $68 million, much of it from drug companies, including Merck and Pfizer.

In Ohio, the industry is going to court to try to block a similar referendum from reaching the ballot. (The ballot measures in both states are being pushed by the AIDS Healthcare Foundation, a Los Angeles group.) The effort is being funded in part by Pharmaceutical Research and Manufacturers of America, or PhRMA,the trade group for the pharmaceutical industry.

Meanwhile, the California Life Sciences Association, a trade group that represents biotechs, is leading a campaign to derail the bill that just passed the state Senate; it would require drug companies to explain and justify price increases. The group is running ads on Facebook and Twitter, warning that the bill would create so much red tape that companies wouldn’t be able to focus on developing new treatments.

“Don’t sacrifice Californians’ access to miracles,” one ad pleads.

“Don’t abandon the Moonshot to cure cancer,” another argues.

Drug companies also have their hands full elsewhere. In Massachusetts, Attorney General Maura Healey has threatened legal action against Gilead Sciences over the high prices of its hepatitis C medications, which cure most patients but carry list prices of at least $84,000 for a full course of treatment. Since that threat was leveled, Gilead, a California company, has joined the Massachusetts Biotechnology Council, which is discussing the issue with the attorney general, according to Mass Bio Executive Vice President Sarah MacDonald.

There has also been plenty of pressure coming from presidential candidates and federal lawmakers, most recently from senators asking drug makers to explain pricing for a drug used to reverse opioid and heroin overdoses.

‘Setting the record straight’

Beyond the state fights, drug companies and their trade groups have launched a broader bid to improve the industry’s image.

The PR push includes an unusual element: Acknowledging that the industry fails. A lot.

Greenwood, the BIO CEO, called for supporters to emphasize that developing drugs is long and hard and expensive work: “We will remind elected officials that, despite the rhetoric on drug prices, just 1 out of 10 biotech companies actually turns a profit. We’ll remind them that 90 percent of biotech clinical research goes toward projects that ultimately fail.”

For the public at large, the PR message will be more optimistic, focusing on the fraction of projects that do succeed. BIO recently launched a digital ad campaign touting the power of drugs to extend patients’ lives. The emotional “Time is Precious” spot features a reel of grateful patients embracing loved ones.

It’s being marshaled in at least one place where the industry faces a specific threat: John F. Lewis, Jr., the CEO BioOhio, said his group has been playing the spot at events across the state.

Greenwood also circulated a list of talking points on the value of modern medicine — including statistics on patient survival rates and drug costs — intended as a resource for “setting the record straight on the cost and value of drugs,” according to the pamphlet.

“I really want you to read this material and get used to making these arguments. More than ever, we need every one of you fully engaged,” Greenwood said.

The industry is also laying plans to revive a tried-and-true tactic: Blame insurance companies for the high out-of-pocket costs that many consumers face when buying drugs. Late last year, insurers and drug manufacturers were eyeing an alliance, hoping to join forces against political attacks. That prospect appears to have fallen apart.

“We’re not going to let our industry be tarnished by insurance practices that burden patients with unaffordable costs,” Greenwood said.

Insurers don’t take kindly to the drug industry’s rhetoric.

“Rather than actually engaging around a tangible solution, it’s not surprising that the pharmaceutical industry would choose to launch another PR campaign that will do little to address the root of the problem — which is their own egregious pricing,” said Clare Krusing, spokesperson for the insurers’ trade group America’s Health Insurance Plans.

Dylan Scott contributed to this report.