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Radar On Market Access: Count on Trump Admin, not Congress, for Drug-Price Action

Posted by Leslie Small on Nov 22, 2018

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In the wake of the 2018 midterm elections — which handed Democrats control of the House of Representatives — President Trump said he hoped to work with lawmakers on the other side of the aisle to lower the cost of prescription drugs.

Some industry analysts, though, are skeptical that sentiment will be enough to enact meaningful change, at least on the legislative front, AIS Health reported.
 
"A Democratic House might have an interest in working with President Trump to pass legislation calling for drug re-importation or direct negotiation, both of which the President has expressed interest in," Credit Suisse’s A.J. Rice wrote in a note to investors. "The issue, however, would be that the Senate is highly unlikely to have any interest in moving legislation relating to re-importation or direct government negotiation over drug prices, which makes legislation highly unlikely."

In a Nov. 7 client bulletin, Robert Laszewski of Health Policy and Strategy Associates, LLC, pointed out some of Trump's early progress on the issue — such as getting drug company executives, like Pfizer Inc.'s CEO, to freeze prices in 2018 — has been short-lived. In a recent earnings call, Pfizer's CEO said the company did not plan to freeze prices for 2019.

Some Wall Street analysts predicted that HHS, rather than Congress, will be the most active on the drug-pricing front.

"We do not believe we will see any fundamental shift on drug pricing given the Trump Administration has been very active through executive action (e.g., Secretary Azar’s Part B proposal and possible rebate elimination)," Leerink analyst Ana Gupte wrote in a research note. "We expect to see continued aggressive negotiation tactics from the Trump administration to rein in drug prices."

Either way, any action on drug-pricing reform is likely to fall into three main buckets, according to Ashraf Shehata, a principal at KPMG's life science advisory practice. Those could target:
 
  • Overall Medicare drug spending, which could involve increasing transparency around pricing and contract negotiation;
  • "Egregious pricing" for medicines that affect public health and safety; and
  • Innovation and R&D, with the goal of getting more drugs — and thus more competition — into the market, especially for high-cost drugs like biologics.
     

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Topics: Industry Trends, Provider