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Blog Post | August 16, 2021

Pharma’s Revolving Door Jeopardizes Biden’s Promise To Lower Drug Costs

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Pharma’s Revolving Door Jeopardizes Biden’s Promise To Lower Drug Costs

In a speech last Thursday, President Biden urged Congress to adopt at least three measures in its final social infrastructure bill: penalties on price-hiking pharmaceutical companies, a new cap on annual drug costs for Medicare recipients, and granting Medicare the power to directly negotiate lower prescription drug prices. Biden remarked “it is safe to say that all of us, whatever our background or our age and where we live, could agree that prescription drug prices are outrageously expensive in America.”

Regardless of how the final congressional negotiations pan out, Biden still has an ace up his sleeve if he wants to lower drug costs quickly. Last month, he signed a landmark executive order (EO) on promoting competition across several sectors, including the prescription drug market. Several provisions within this EO take direct aim at soaring drug prices, directing agencies like the Department of Health and Human Services (HHS) and the Food and Drug Administration (FDA) to end Big Pharma’s monopolistic price schemes.

There’s just one issue: to deliver on the EO’s promise and actually slash drug prices, Biden must make sure these agencies are staffed with the right people.

An All Of Government Approach To Drug Prices

Biden’s EO promises an “all of government” approach to promoting competition in monopolized markets. Noting that Big Pharma’s sizable market power and “pay-for-delay” agreements (in which brand-name manufacturers pay generic manufacturers to stay out of the market) have caused Americans to pay over twice as much for prescription drugs as residents of other industrialized nations, the EO tasks several executive branch agencies to use their existing powers to rein in drug prices. 

First, it directs HHS to increase support for generic and biosimilar versions of name-brand drugs and develop a “comprehensive plan within 45 days [of the EO’s signing] to combat high prescription drug prices and price gouging.” The EO also directs the FDA — which is housed within HHS — to work with states and tribes to safely import prescription drugs from Canada, a measure that could save the federal government almost $7 billion over a decade. Finally, the EO encourages the Federal Trade Commission (FTC) to ban pay-for-delay agreements by issuing an agency rule on the matter, a measure that could save consumers and taxpayers nearly $3.5 billion in drug costs per year. 

Senators Amy Klobuchar and Chuck Grassley — who in February introduced a bill to allow the personal importation of affordable drugs from Canada — have welcomed the Biden EO’s provision on drug importation and urged HHS Secretary Xavier Becerra to allow states like Florida and Colorado to forge ahead with their existing efforts to allow the importation of Canadian drugs. 

Polling conducted by the Kaiser Family Foundation has similarly found broad support among voters of all political stripes for the measures contained in Biden’s EO: 88% of Americans support making it easier for generic drugs to come to market and 78% (including 75% of Democrats and 75% of Republicans) support the importation of prescription drugs from licensed Canadian pharmacies. 

Personnel Vacancies And Pharma’s Revolving Door Are Undermining The EO

Unfortunately, Biden’s ambitious plan to slash drug prices via the executive branch is already facing roadblocks, foremost among them the litany of Big Pharma allies he has tapped to staff the administration. As my colleagues Fatou Ndiaye and Timi Iwayemi wrote last month, Biden has appointed several Pharma insiders as top White House advisors, including former Novo Nordisk lawyer Martine Cicconi, former Exact Sciences lawyer Jonathan Cedarbaum, former Mylan lawyer Jonathan Su, and former Eli Lilly and Sanofi lobbyist Steve Ricchetti. 

At HHS, the once-promising pick of progressive Xavier Becerra as the department’s Secretary has been undermined by the appointments of agency administrators who previously worked for Big Pharma monopolies. Center for Medicare and Medicaid Services (CMS) Administrator Chiquita Brooks-LaSure joined the administration after serving as a corporate attorney for Pfizer and Gilead Pharmaceuticals — two firms that have stridently fought regulatory efforts to rein in drug prices. Elizabeth Fowler, Brooks-Lasure’s second-in-command at CMS, likewise boasts an alarming resume: she was a Johnson & Johnson executive during the company’s price hike, painkiller, and asbestos scandals, and helped write a 2003 law that banned Medicare from negotiating lower drug prices.

These troubling hires at CMS could portend trouble for the FDA, another agency housed in HHS with a leadership vacancy. Since January, the FDA has lacked a permanent head and has been helmed by Janet Woodcock, the longtime director of the FDA’s Center for Drug Evaluation and Research (CDER). In her previous role overseeing the federal government’s pharmaceutical approval process, Woodcock was known as “Big Pharma’s favorite regulator” for relaxing regulatory barriers and accelerating the approval of new drugs. 

During Woodcock’s tenure at CDER, the FDA approved the sale of high-strength painkiller OxyContin based on false claims by manufacturer Purdue Pharma that the drug was safer than other painkillers, sparking a deadly opioid abuse epidemic. Woodcock’s dereliction of duty during the opioid crisis led Public Citizen and over 27 medical advocacy groups to urge Biden not to nominate her as permanent FDA head. This past June, Woodcock’s accelerated approval of controversial Alzheimer’s drug Aduhelm — which senior agency officials have argued does not work and should not have been approved — again sparked massive backlash from consumer advocacy groups, medical experts, and even Senator Joe Manchin for prioritizing Pharma’s interests over the public’s. Whether Biden will replace Woodcock with another Pharma ally — who may seek to prevent the importation of drugs from Canada to protect industry profits — has now become a question of vital importance. 

A related cause for concern is a vacancy at the FTC that is due to arise from Commissioner Rohit Chopra’s nomination for Consumer Financial Protection Bureau Director. If Chopra is confirmed by the Senate to lead the CFPB, it will leave the FTC in a 2-2 partisan deadlock and imperil much of the regulatory and law enforcement agenda that Chair Lina Khan (one of Biden’s best staffing picks) hopes to advance. Without an imminent nominee for this soon-to-be-empty fifth seat, Biden’s promise to end pay-to-delay agreements may be dead on arrival.

Regulatory Capture And The Road Ahead 

The executive branch personnel issues surrounding Biden’s EO underscore the larger trend of the capture of health regulatory agencies by corporate interests. As “Rising”’s Kim Iversen recently documented, the FDA has become increasingly reliant on user fees paid by pharmaceutical companies as a source of agency funding, creating a perverse financial incentive to expedite drug approvals and reduce regulatory oversight of drugs that are later found to have safety issues. Likewise, the broader revolving door between Pharma and the FDA has expanded, with over 27 percent of former regulatory approval employees between 2001 and 2010 having left the agency to work for pharmaceutical companies. Similar problems have plagued HHS and the FTC, where high-profile regulators like Alex Azar and Ian Conner have revolved from the highest echelons of corporate America to government, and vice versa. 

As I and my colleagues have written before, this persistent revolving door between corporate America and the executive branch is not only corrosive for public policy outcomes, but is also deeply unpopular. Voters, the polling affirms, want a government that isn’t captured by and subservient to corporate interests. Here, Biden has a unique opportunity to restore faith in government by appointing true public servants to fill executive branch vacancies and demonstrating to voters (particularly those unsure about if or for whom they will vote in next year’s midterms) that government can work for the people.

If Biden maximizes this opportunity, his public interest-minded appointees would clash with Big Pharma on a regular basis in high-profile legal cases (as HHS Secretary Becerra did while serving as California Attorney General), inviting frequent coverage of his administration’s efforts to lower drug prices. In other words, Democrats could quickly and easily promote their pro-competition policies and become branded as the party serious about taking on Big Pharma — a perfect recipe for smart policy and smart politics. 

If President Biden is serious about fulfilling the promises outlined in his EO and curbing corporate America’s stranglehold on drug prices, he must immediately fill vacancies at HHS, the FDA, and the FTC with public servants who will use their office to serve the public’s interest, not Big Pharma’s. 

IMAGE: “President Biden on Prescription Drug Prices”, C-SPAN.

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