Two of the most innovative pharmaceutical corporations in the world have their headquarters on opposite banks of the Rhine as it flows through Basel, Switzerland. Ranked No. 2 and 4 in total worldwide sales, Roche (RHHBY) makes Herceptin and other important cancer treatments while Novartis (NVS) recently brought to market the immune therapy Kymriah and the gene therapy Zolgensma. Sanofi (SNY) (7) is in Paris, Glaxo Smith Kline (6) and AstraZeneca (AZN) (14) are in London, and Takeda (TAK) (20) is based in Osaka.

The pharmaceutical industry’s impressive geographic diversity is nowhere to be seen in talking points distributed by PhRMA, the pharmaceutical industry’s trade association, that Congressional staffers shared with me. The talking points form the basis of desperate efforts by lobbyists and industry allies to discredit House Speaker Nancy Pelosi’s drug price negotiation bill, so this omission is a telling one.

They begin: “The radical drug pricing plan offered by House Speaker Nancy Pelosi would transform the market-based system that has made the US the global leader in developing innovative, life-saving treatments and cures.” In other words, U.S. patients, taxpayers, and employers must pay higher prices for medications than citizens of other countries because that is why the U.S. has successful pharmaceutical companies.

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That Roche and Novartis are dominant players and based in Switzerland exposes the false logic of this point, as drug prices are 75% lower in Switzerland than in the U.S., according to the House Ways and Means Committee. Drug prices in France, the United Kingdom, and Japan are lower, too. The pharmaceutical industry is global, and our overpaying for medications in the U.S. explains no more of New Jersey-based Merck’s successes than it does of Takeda’s, half a world away.

PhRMA also distributed some slides noting (based on internal research) that only 71% of new cancer medicines available in the U.S. can be found in Germany. So what? Some countries reject the use of certain drugs because they do not represent meaningful improvements over older ones. But that is rare in this country. Some drug corporations walk away from a small market if that nation’s government does not see fit to pay the price demanded. But the U.S. is every company’s biggest market, and so much, much harder to abandon.

What’s more, Pelosi’s bill sets a ceiling price for negotiation that is 20% higher than the prices companies have already accepted. It also limits negotiation to drugs already on the U.S. market. These are two more reasons it is hard to believe that pharmaceutical corporations will not accept the prices the bill portends.

cancer-survival
Source: Claudi Allemani and colleagues. Global surveillance of cancer survival 1995-2009. The Lancet. 2015 Mar 14;385(9972):977-1010.

Then there is PhRMA’s supplemental handout, declaring that 5-year cancer survival is better in the U.S. than in the countries that Pelosi’s bill references as price comparators. As the trade association doubtless knows, cancer survival is a lousy measure of comparative disease outcomes, as it is affected by lead time secondary to screening. But no matter, the reference PhRMA provided does not back up its claim. It shows that survival for many cancers is actually the same or better in many of the reference countries.

But let’s go with PhRMA’s claim for a moment. The lobbying group says that lower prices for drugs in other countries cause cancer survival to be worse. Is the organization suggesting that the higher prices we pay imbue magical potency on their member company’s products sold here? And is it warning that peeking at the prices paid in another country will equate to the U.S. importing all the features of those countries’ health systems?

Given that the countries in the Speaker’s bill have longer life expectancies than the U.S., better health system performance by nearly every measure, offer all their residents  health insurance, and pay less per capita for health care, that might not be a bad outcome. But, it does make me wonder what other attributes of these countries might slip across our borders. Will looking at French prices improve our wines and our men’s soccer team? That would certainly be nice.

In Washington, talking points are generally not intended to persuade anyone. Instead, they mostly serve to backfill rationales into minds that are already made up. But for prescription drugs we need serious reform of both pricing and insurance coverage. It’s not just one or the other. There will be tradeoffs too, but if you want to know what they are, don’t read PhRMA’s talking points.

Peter B. Bach, M.D., is the director of the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center in New York City.

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  • Dear Dr. Bach,

    With all due respect, you fail to mention that in many of these non-US countries (especially Japan), they don’t have the insurance companies (Aetna, Cigna, United Healthcare, etc.) and PBS’s (e.g., Express Scripts) that suck out the profits of the PhRMA member companies. Are you suggesting these “middlemen” firms do not contribute to the high US drug prices? IMHO they do not add any value to the US health care system other than maximizigf their own profits. BTW, are you aware of any of these middlemen companies, when they successfully negotiate a major discount for an expensive drug price, pass these savings from the disconts directly to the patients taking those drugs? I am not area of any. So where is the benefit to the patients claimed (falsely and conveniently) by these companies?

  • said that the usual pharma tantrum ” high prices are necessary to foster innovation” is just plain BS, your counter argument that many of the biggest biopharmaceutical are from abroad, is fallacious as well. Because, although such companies are from overseas, most if not all of them, have their research centers based in the US.
    And that actually rises a different consideration, the US (although for different reasons) is the China of the biomedical research business. In fact, all these international biopharmaceutical companies outsource their research to the US, leaving scores of scientists worldwide out in the cold.
    And no, it is not because the best talents are just in the US.

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