The two biopharmaceutical industry organizations entered Medicare price negotiations after the loss of several prominent members and executives.
Pictured: Illustration of office workers holding their belongings and going out the exit/iStock, nadia_bormotova
The Pharmaceutical Research and Manufacturers of America (PhRMA) and the Biotechnology Innovation Organization (BIO) entered 2024 a little battered, having lost multiple high-profile members and top executives over the past 18 months, not to mention enduring a political battle exemplified by the passage of the Inflation Reduction Act (IRA).
It’s unclear why drug companies including AbbVie and AstraZeneca have left the lobby groups. In an interview with BioSpace, John Abramson, a lecturer in the Department of Health Care Policy at Harvard Medical School and a longtime critic of Big Pharma, speculated about a confluence of factors.
“Are they pretending to be wounded? Did they find that they can be as effective without paying their PhRMA dues? Has PhRMA’s reputation . . . gotten so bad that companies are going to try to achieve the same results without having the PhRMA tag being attached to them?” Abramson said. “It’s probably some combination of the three.”
Robert Zirkelbach, PhRMA’s executive vice president of public affairs, downplayed the losses and denied that the organization is in any sort of trouble. “Members come and go for different reasons,” he said. He mentioned Genmab, which joined PhRMA in December, as a new addition to PhRMA that he is proud of, as well as Genentech and Gilead Sciences, both of which joined in summer 2019.
“We have very good engagement at the highest levels, and I think that makes us a really strong association,” Zirkelbach said.
But members aren’t the only thing the industry groups have lost of late. Some of their executives also turned over, including PhRMA’s top federal lobbyist, Anne Esposito; Jennifer Bryant, senior vice president for policy and research; and BIO CEO Michelle McMurry-Heath.
While PhRMA characterized Bryant’s departure as a retirement and Esposito confirmed that her split was amicable, McMurry-Heath’s exit after two years on the job was “swift and abrupt” after BIO’s board of directors hired an outside firm to interview employees and assess the job she was doing, STAT News reported. BIO, AHIP (which represents private health insurers) and the Association for Accessible Medications (AAM) were all without heads for a period of time last year.
This is a critical time for Big Pharma, which suffered a rare public policy loss in 2022 with the passage of the Inflation Reduction Act. Among other things, the law gave Medicare the right to negotiate the price of certain prescription drugs—something PhRMA, reflecting the stance of its members, strongly opposed. Talks opened a few months ago for the first 10 drugs, and the Department of Health and Human Services will publish negotiated rates by Sept. 1 that will take effect in January 2026.
Last June, PhRMA and its allies sued to block enforcement of the price-negotiation provision. The U.S. Chamber of Commerce and PhRMA members Merck, Johnson & Johnson and Bristol Myers Squibb earlier filed their own suits claiming that the IRA is unconstitutional.
Abramson said that any turmoil at PhRMA and BIO was likely brought on by the IRA as well as political and consumer pressure.
Cost Considerations
AbbVie departed PhRMA in December 2022. Teva Pharmaceuticals followed in February 2023 and AstraZeneca in May 2023. None stated why, and none responded to BioSpace’s requests for comment, but all three have reduced spending on lobbying, according to STAT.
Membership “may not be cost-effective for the individual companies,” Abramson noted. Zirkelbach said that dues are based on each member’s revenues, and in 2016 the total added up to about $300 million annually, Politico reported that year.
In addition to PhRMA, AbbVie has left BIO and the Business Roundtable, an association of CEOs of major corporations. BIO also lost UCB when the Belgian biopharma firm did not renew its membership for 2024 after an evaluation of its “engagement across trade associations,” spokesperson Erica Puntel said via email. Puntel said that the UCB remains a member of PhRMA and the National Pharmaceutical Council (NPC).
BIO spokesperson Jacy Gomez Thomas declined to comment on specific companies but noted a current “difficult” economy for the biopharma industry. “We certainly hope that when economic conditions improve, we can welcome those companies back and welcome new members to join us as well,” Gomez Thomas said via email.
Political Posturing
Whie Big Pharma vehemently opposed the IRA, the bill was actually a compromise that was less restrictive than the proposed Lower Drug Costs Now Act, championed by then-Speaker of the House Nancy Pelosi (D-Calif.). In 2019, PhRMA President and CEO Stephen Ubl warned that the Pelosi-backed bill would cause a “nuclear winter” in drug discovery and put smaller biotech companies out of business.
Abramson called Ubl’s statement a “scare tactic” to turn consumers against the idea of price negotiation, and suggested that the impact of the IRA on drug companies would be negligible. He cited a 2023 Congressional Budget Office report estimating that the Medicare drug negotiation provisions would cut the number of new drugs entering the U.S. market by 1 percent over the next 30 years.
If Democrats sweep the 2024 election, a bill like the Lower Drug Costs Now Act could be back on the table, however.
Zirkelbach said that the current climate “just reinforces the need to have a strong and unified voice” for Big Pharma, which is what PhRMA and BIO aim to do. “It’s important that our industry, working alongside many others, ensure that we have a policy environment that will support and sustain continued innovation.”
Neil Versel is a freelance healthcare and life sciences journalist based in Chicago. Reach him on LinkedIn or @nversel on X.
