Indianapolis-based Eli Lilly is joining other pharmaceutical companies in arguing against legislation that aims to reduce drug costs.
Congress is debating the Democratic proposal, H.R.3, that would allow the federal government to negotiate prescription drug prices in an effort to lower costs.
Eli Lilly chairman and CEO Dave Ricks said it would hurt current and future investments, including in Indiana.
“I don't dispute that it would lower prices. I think it's an extremely inefficient way to do it, and would have a long term effect on companies like Lilly,” he said.
He argues it’s the insurance system that needs to be fixed, not the pharmaceutical industry and he said the proposed bill fails to do that.
“There are problems in drug pricing. I'm not saying there are no problems,” said Ricks. “But in the main, I think when people talk about this issue, they're saying – like my mother, who has chronic conditions and is in the Medicare benefit. When she goes to CVS and buys her medicine, she's like, 'boy, that was expensive.' I think that's what people are mostly talking about. And that's a product of insurance design.”
Lilly’s insulin Humalog cost about $20 when it first became available in 1996. In 2019, its list price hit $275 per vial, a more than 1,000 percent increase.
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One part of the legislation would penalize pharmaceutical companies if they raised drug prices more than the rate of inflation.
Ricks said he would be willing to discuss this part of the bill if it was a way to drive down consumer costs.
“But one principle we have is, whatever the government saves or generates in their world revenue from the pharmaceutical industry, we'd like to see that go to patient savings, not to some other priority – like dental insurance or electric batteries for cars, or some other priority that's in this huge bill being discussed,” said Ricks.
He said if the bill becomes law, Lilly would have to reduce its research and development budget in the U.S. by 40 percent or more.
“We have 42 clinical programs right now under development for future medicines for everything from Alzheimers, to cardiovascular disease to cancers,” said Ricks. “We'd have to cut probably half of those programs. And with it, you know of course, buildings would have to be shuttered and jobs would be eliminated.”
Ricks said the bill would also hurt the emerging biotech industry in Indianapolis and around Purdue University.
Last year the company reported $24 billion in revenue and more than $2 billion in profits. The company has said it plans to spend about $7 billion in research and development this year.