Drugmakers debate pricing, legislation

January 12, 2016

Pharmaceutical companies are battling state legislation that would require state programs such as Medicaid to pay no more than other Federal government programs for drugs.

Pharmaceutical companies are battling state legislation that would require state programs such as Medicaid to pay no more than other Federal government programs for drugs.

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Simultaneously, pharmaceutical CEOs recently defended the price of their drugs and said that consumers don’t have “the full picture”.

In California and Ohio, advocates for AIDS patients are pushing ballot measures that would require state programs, such as Medicaid or prison systems, to pay no more for medicines than the US Department of Veteran Affairs. Beyond receiving a set 24% discount from drug makers, the agency is free to negotiate still lower prices for its 151 hospitals and 800 community clinics, according to STAT News.

Related: Valeant CEO says drug pricing may drop

The goal [of the ballot initiatives] is to obtain lower prices, as well as gain more transparency on industry pricing, which is opaque,” Ged Kenslea with the AIDS Healthcare Foundation, told the publication.

However, the pharmaceutical industry is fighting these measures, contributing $34 million in California to a campaign against the ballot initiative.

And pharmaceutical CEOs defended high drug prices at the recent J.P. Morgan Health Care Conference. “Some of the noise you hear about drug pricing neglects the fact that we often must pay deep discounts in a market-based environment, where we’re competing in many cases against other alternative therapies, including those low-cost generics,” John Lechleiter, CEO of Eli Lilly, told CNBC’s “Squawk on the Street”.

“If you look at the market about a decade ago, 54 percent of the pharmaceutical market was genericized; today, 90 percent is genericized,” Pfizer CEO Ian Read told CNBC’s “Fast Money: Halftime Report.”

Meanwhile, Novartis CEO Joseph Jimenez told CNBC that innovation has to be rewarded “or we’re just not going to be able to see the kind of breakthroughs we have seen” on cancer research, specifically regarding the benefits of Gleevec.

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