By Ipsita Smolinski
December 1, 2016 at 5:00 am ET
The pharmaceutical industry breathed a sigh of relief when Donald Trump was declared the next president of the United States. While not a wholly known entity, the devil the industry knew was a lot scarier than the devil it didn’t know. Hillary Clinton had spelled danger.
Trump has railed against the high cost of pharmaceuticals and championed the reimportation of foreign drugs, yet pharma is all but ignored in the president-elect’s transition plan. And despite decrying the pharma lobby, Trump has welcomed pharma’s influence into his inner circle, including Vice President-elect Mike Pence, a major recipient of support from Indiana-based Eli Lilly.
It is hard to ignore the uptick in public scrutiny of drug pricing. The issue remains a concern for Americans, with 74 percent of respondents to a recent Kaiser Family Foundation survey saying that making drugs for chronic conditions affordable is a top health care priority for the federal government, including 68 percent of Republicans. Sixty-four percent of voters who responded to a Harvard School of Public Health poll said the federal government should have the ability to limit drug price increases.
Trump prioritizes advances in research and development and reforming the Food and Drug Administration with an eye on patients and new and innovative medical products — a clear call for greater generic competition in the marketplace. A Trump administration could even increase FDA funding to speed up generic drug approval.
No one is ruling out the possibility that a President Trump may end up skewing toward traditional Republican solutions, including pricing drugs based on their relative health benefit and requiring greater disclosure of pricing details. Sen. John McCain’s (R-Ariz.) FAIR Drug Pricing Act, which would require manufacturers to report annual price increases of more than 10 percent, could be the first step in adding transparency to pricing, another issue oft cited by Trump on the campaign trail. McCain is also the author of the Safe and Affordable Drugs from Canada Act, which would allow for the purchase of prescription drugs from approved Canadian pharmacies.
Meanwhile, the industry faces pressures from outside Washington as well. Innovation gaps, and expensive, late-stage drug failures can only be addressed from within.
Pricing pressure triggered by market share battles for newer or off-patent drugs remains an issue, as pharmacy benefit managers continue to boost formulary exposure for drugs offering the biggest discounts. Also, the days of revenue growth from huge price increases are likely coming to an end.
States are starting to react, too. PhRMA managed to beat back California’s Prop 61 (at the cost of more than $100 million), but other states are likely to take up the mantle with lessons learned from the California battle. Already in 2017, Ohio voters will decide whether to require state agencies to pay no more for prescription drugs than the Department of Veterans Affairs pays.
Drug prices will continue to be a powerful “pocketbook issue” for Americans, a fact that will not escape a Congress constantly up for reelection. House Oversight Committee ranking member Elijah Cummings (D-Md.) has been a vocal proponent of legislative action to stem the rising tide of drug costs. He has called congressional inactivity on this issue “serious legislative malpractice and political malpractice.”
Democrats such as Sens. Elizabeth Warren (D-Mass.) and Bernie Sanders (I-Vt.) along with House members such as Cummings will likely continue the chorus of calling out manufacturers that egregiously price new or off-patent therapeutics.
What is clear is that, despite having Trump in the White House, the pharmaceutical industry is not off the hook for its pricing strategies. The industry has a window of opportunity to act proactively. Former Turing Pharmaceuticals CEO Martin Shkreli has been the public face of pharma, but he doesn’t have to be. The pharmaceutical industry can use what’s likely to be a more benign congressional environment to enact value based and innovative cost contracts, work on 340B reforms, and even foster more transparency of drug costs — before policies are forced upon them later.
Ipsita Smolinski is Managing Director of Capitol Street, where she advises clients on national healthcare policy and emerging trends.
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Martin Shkreli is the former CEO of Turing Pharmaceuticals.