The pharmaceutical industry’s leading trade group disclosed Tuesday that it had spent a record $27.5 million on lobbying in 2018, $1.4 million more than in 2009, when Congress and the White House created the Affordable Care Act, the health-care overhaul better known as Obamacare.
The surge in spending by the Pharmaceutical Research and Manufacturers of America came as the industry failed to win a last-minute legislative fix that would have reduced its share of outlays in a popular Medicare program, and as it prepared for what could be its most challenging year in decades.
PhRMA, the trade association for the U.S.’s top drug makers, spent more than $6 million to lobby Congress and the Trump administration in the fourth quarter, according to disclosures filed with the Senate Office of Public Records. Its biggest-ever quarter came in the first three months of 2018, when it reported spending nearly $10 million. A spokeswoman for the group declined to comment.
High drug costs
One of the few issues that unites President Donald Trump and the Democrats newly in charge of the U.S. House of Representatives is reducing the price of prescription medicine. Both sides will be looking for accomplishments to tout at a time when the pharmaceutical industry has become a target of public ire.
The filings cover the period when the midterm elections were being held to determine control of Congress. Drug costs were among the leading campaign issues in many House and Senate races.
Lobbying spending for a handful of pharmaceutical companies also increased in the fourth quarter. Among them: Abbott Laboratories, which spent $1.4 million; Johnson & Johnson Services Inc., which spent $2.3 million. AstraZeneca Pharmaceuticals LP, Boehringer Ingelheim Pharmaceuticals Inc. and Teva Pharmaceutical Industries Ltd. also saw increased spending in the quarter. Many drug makers, which must report before midnight Wednesday, have yet to file.
The Trump administration has proposed plans to increase third-party negotiation of some drugs in Medicare, the health program for the elderly and disabled. It also wants to benchmark what Medicare pays for drugs to the prices that other developed countries pay. In Europe, for example, prices are typically lower because they are set by the government.
House Democrats, meanwhile, have begun an investigation into industry pricing practices. The Oversight and Reform Committee sent requests for detailed information on pricing practices to a dozen companies, including Pfizer Inc., Amgen Inc, and AstraZeneca.
Representative Elijah Cummings of Maryland, the committee chairman, said one of the goals is to determine “what steps can be taken to reduce prescription drug prices.” Trump’s point person on the issue, Health and Human Services Secretary Alex Azar, tweeted a photo of himself with Cummings two days after the House inquiry began, saying he appreciated the commitment to lowering prices.
In the Senate, Chuck Grassley of Iowa, the chairman of the Finance Committee, said Tuesday that he planned to hold hearings on drug prices, beginning on Jan. 29.
The industry’s new challenges follow a failed effort to include in the year-end spending bill a provision that would have given it relief from large discounts it’s required to offer to some beneficiaries of Medicare Part D, which covers prescription drugs. Trump’s decision to shut down part of the government and the ensuing standoff with Congress made the effort moot.
The industry sought to undo legislation, which Congress passed nearly a year ago, requiring drug makers to give 70 percent discounts, up from 50 percent, to Medicare beneficiaries who exceed a $3,750 annual cap on out-of-pocket drug costs.
Once beneficiaries exceed $5,000 in out-of-pocket expenses, including the discounts pharmaceutical firms offer, Medicare starts picking up the tab again. The gap in coverage is known as the doughnut hole.
The inability to roll back the discount will cost drug makers as much as $1.9 billion in 2019, according to one estimate.