President-elect Donald Trump on Wednesday (January 11, 2017) pledged to change the way the federal government purchases prescription drugs, a striking, largely unforseen warning to the drug industry that he apparently is serious about keeping his campaign promises to address drug costs.@realDonaldTrump pledged to change the way the federal government purchases prescription drugs Click To Tweet
He gave the subject near-top billing in his first press conference as President-elect, says STAT News, panning the pharmaceutical industry for overseas production and promising, in vague terms, to open up more price negotiations for medications.
“Our drug industry has been disastrous. They’re leaving left and right,” Trump said at the news conference at Trump Tower, according to STAT. “We have to get our drug industry coming back.”
Pivoting, he then took aim at drug prices, saying, “There’s very little bidding on drugs. We’re the largest buyer of drugs in the world and yet we don’t bid properly.”
By best reckoning Trump seemed to be alluding to plans to allow Medicare to negotiate drug prices, a topic that was part of his campaign but was more forcefully embraced by Hillary Clinton and Senator Bernie Sanders of Vermont. Critics say that negotiating for every drug would be out of the question, and that officials would be restrained by laws requiring coverage of certain protected classes of drugs.
Meanwhile, the Nasdaq Biotechnology Index crashed 3.4% after the market opened Wednesday morning, with stocks in a virtual free-fall immediately after Trump’s comments. They recovered somewhat on Thursday, with the biotech index paring its loss to 2.3%.
In his remarks, the President-elect said he would establish “new bidding procedures” for drug purchases.
“They’re getting away with murder,” he said, referring to drug companies. “Pharma has a lot of lobbies and a lot of lobbyists and a lot of power.” For good measure he added, “We’re going to save billions of dollars over a period of time.”
The drug industry’s top lobbying group, the Pharmaceutical Research and Manufacturers of America, did not address Trump’s remarks directly in a statement. But the group said it was:
“committed to working with President-elect Trump and Congress to improve American competitiveness and protect American jobs.”
While GOP leaders haven’t supported Medicare negotiations, a STAT-Harvard poll a year ago found that about 7 in 10 Americans, including two-thirds of Republicans, said the giant federal health insurance program should be able to negotiate lower prices for all prescription drugs.
Trump’s remarks also rattled investors at the J.P. Morgan Healthcare Conference in San Francisco, which is the year’s largest biopharma investment bash. The politics and pressures around drug pricing last year led generalist investors to withdraw some $7 billion in funding from the public biopharma funds and indexes, said Brad Loncar, who runs a Nasdaq-traded fund focused on immunotherapy.
“His choice of words in saying that this industry is ‘getting away with murder,’ I think, is a cheap shot,” Loncar said. “A sound bite like that has the potential to scare a lot of people away from investing in this industry.”
In his remarks, Trump said that he supported approving a replacement for the Affordable Care Act at the same time the measure is repealed, instead of repealing President Obama’s health law and then taking the necessary time to come up with a replacement plan, as some congressional Republicans have proposed doing.
But the President-elect did not provide any specifics about a possible replacement plan, saying his administration would release a plan after Tom Price, his nominee for secretary of the Department of Health and Human Services, is confirmed.
A much-anticipated, long-overdue news conference with the President-elect, and another exercise in attempting to discern fact from fiction.
Remember the Trump euphoria that buoyed biotech stocks after the President-elect captured the White House in November? Investors seemed to decide his administration would be one in which scrutiny of drug pricing would vanish and profits would soar. Shares in the Nasdaq Biotech Index (NBI) surged more on November 9, 2016 than they had in more than eight years.
Well, that was then. The dream was a fantasy and the euphoria just crash-landed. At his first press conference since July, Trump said Wednesday (January 11, 2017) that the industry is “getting away with murder” and the government needs to take action, reports FiercePharma.
What action? Trump said the government should require competitive bidding to get drug costs down, claiming that the US can save “billions of dollars” with such a process. He called out pharma lobbyists and their power in Washington. And for good measure, repeating a familiar catchphrase, he said Pharma needs to be pressured to beef up manufacturing in the US.
An early clue to this sudden shift was a Time magazine interview in December, when Trump pledged to bring down drug prices, a warning that took 3% off the NBI, recalls Bloomberg. Trump’s broadside in Time was bad enough.
His latest punch was even worse. He was much more critical of the industry than usual and nodded at potential policy actions that could hurt profits. And that highlights the problem with simple explanations, especially ones that assign blame to an entire industry; they threaten clear thinking.
To confuse matters further, despite Trump’s recent sway over congressional Republicans, GOP lawmakers said Wednesday they’re standing firm against the President elect’s assertion the government should negotiate drug prices, and some lawmakers doubt Trump really means what he said. “We can agree to disagree at times,” New York Rep. Chris Collins, the Trump transition team’s congressional liaison, told Inside Health Policy.
Trump last January during the presidential campaign suggested letting Medicare negotiate prices, but he didn’t include that proposal in the healthcare plan he subsequently released last March and he didn’t post it on his transition web site, leading drug lobbyists to believe that Trump wouldn’t push for drug-price negotiation. But then at the news conference he said,
“We’re the largest buyer of drugs in the world, and yet we don’t bid properly. And we’re going to start bidding and were going to save billions of dollars over a period of time.”
If you don’t think these somewhat random remarks are influential up on Capitol Hill, keep in mind that Trump has been credited with swaying congressional Republicans with mere tweets. House Republicans last week backed off their plans to strip the Office of Government Ethics of much of its power.
Then, an increasing number of Republicans lawmakers began questioning the wisdom of repealing the Affordable Care Act without a replacement after Trump called for the law to be repealed and replaced simultaneously.
Rep. Trent Franks (R-AZ) said he opposes government price controls and he believes Trump does, too.
“The most proven mechanism to control drug prices is a free market, and Trump knows that best,” Rep. Franks said.
New York Rep. Chris Collins, the Trump transition team’s congressional liaison, also said he doubts Trump really wants to let the government control prices.
“What we’ve seen is President Trump using the bully pulpit is already getting incredible results from auto makers and other companies, and I wouldn’t doubt that he can do the same with pharmaceuticals,” Collins said.
Despite repeated warnings from some industry observers, biotech investors keep getting blindsided by the President-elect. His swift pivot to Pharma on Wednesday came as a surprise amid a news conference that was primarily oriented around intelligence reports, the media and his plans for his business empire. It’s this extraordinary talent at redirecting attention away from matters he doesn’t wish to speak to that suggests biotech investors need a new lens.Steve's Take: The drug-pricing debate didn't expire on Nov. 8 . . . far from it Click To Tweet
It’s time to shed any remaining, blind optimism about the President-elect’s intentions for the industry and concede the distinct possibility that the drug-pricing debate didn’t expire on November 8. Far from it.