After House Republicans unveiled a new healthcare bill that's all but silent on drug pricing, President Donald Trump on Tuesday promised that he hasn't abandoned his pledge to take action.
Trump first tweeted Tuesday that “getting rid of state lines, which will promote competition, will be in phase 2 & 3 of healthcare rollout,” apparently referring to geographic restrictions on insurers—and filling in what he sees as a gap in the Obamacare repeal-and-replace effort.
Then, five minutes later, he switched to pharma.
I am working on a new system where there will be competition in the Drug Industry. Pricing for the American people will come way down!— Donald J. Trump (@realDonaldTrump) March 7, 2017
It’s the latest in a series of political developments—and Trump pronouncements—that have kept industry-watchers on edge. The president has made repeated promises to "bring down" drug prices, and has backed some ideas, such as Medicare price negotiation and drug importation, that drugmakers have fought off in the past. As yet, however, the administration hasn't set out specific proposals to tackle high drug prices in the U.S.
Reacting to Tuesday’s presidential tweet, Evercore ISI analyst Umer Raffat wondered what Trump meant by bolstering competition. He noted that brand vs. generic competition exists and direct brand vs. brand competition requires interchangeable meds. That’s possible in some therapeutic areas, but not all, he pointed out.
“Reality is, we just don't know until something definitive is put out,” Raffat said.
Before he took office in January, Trump said the drug industry was “getting away with murder.” He promised more competitive “bidding” to save the U.S. billions in healthcare costs. That promise left drugmakers and analysts scratching their heads about what sort of competitive bidding process could apply to drugs.
After that, at a White House meeting with industry representatives, the president softened his tone to say that pharma companies have done a “terrific job over the years, but we have to get prices down for a lot of reasons.” Top CEOs and trade organization leaders came away from that meeting apparently cheered by talk of tax reform, and less worried about pricing moves.
Still, the industry's pricing stance is quite different from Trump's public comments. In the wake of Trump's January screed, Pfizer CEO Ian Read said the president likely “hasn’t been briefed” on the competition dynamics in the drug industry. Read said “it’s a very complicated industry," one with a “huge amount of bidding and extremely aggressive purchasing.”
While the drug pricing debate rolls on, pharma could be working to leverage its job-creation argument in negotiations with a White House that has put a strong emphasis on that subject, according to Raffat.
Biopharma shares were trading slightly down late Tuesday morning after the tweet.