With Republicans maintaining control of Congress, along with winning the White House, some in pharma may believe that they no longer need to worry about price controls being imposed in the U.S. They shouldn’t celebrate yet.
Reforming the Affordable Care Act (ACA) is expected to be a priority of the new Congress, and drug pricing regulation can be expected to be a piece of that reform. That is what Evercore ISI analyst Terry Haines told investors overnight in his election note about the Trump presidential win. He said ACA reform has to be a priority for both policy and political reasons, and it will be a congressional priority as much as a Trump priority.
“We believe that ACA reform will inevitably be a priority given the struggles of certain markets to maintain competitive health insurance exchange offerings and premium growth contained. Drug pricing regulation is likely to happen under this scenario.”
He reminded investors that on Medicare Part D reform, “Trump’s position is identical to Clinton’s--including price as another criterion to use in negotiations,” he pointed out. “Trump can make inclusion of that a condition of signing an ACA reform bill.”
On the other hand, legislation will not be simply about what Trump wants. Congress writes the laws, not the president. “Put bluntly, Trump cannot unilaterally change laws or regulations with the stroke of a pen.”
It will be important to see what House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell say over the next few days to know what to expect. Speaker Ryan’s "A Better Way" legislative proposal is about ways to achieve goals regardless of who becomes president, Haines said. The new Republican Congress “is not going to kowtow to a President Trump, but rather will seek to drive the policy agenda.”
As a result he thinks Trump will operate in a more pragmatic than populist mode, because Congress can’t afford to have him “freelancing both for constitutional and purely political reasons.” And with the Senate split pretty much how it is today, even in the all-Republican Washington scenario, he pointed out that Democrats are not irrelevant and can force compromise.
Of course there are those who wonder if Ryan will survive as speaker of the House, given the public feuding during the campaign between him and the president-elect. Rep. Chris Collins of New York, an early Trump supporter who is also friendly with Ryan, is not among those. “I don’t believe for a second there will be any hard feelings, either way. Mr. Trump is not the kind of person who would look for revenge,” Collins declared to Politico.
Congress is already hearing from industry lobbyists about what they will be looking for in the new administration. In a statement today, Steve Ubl, CEO of lobbying powerhouse PhRMA, said, "We look forward to working with the new administration, as well as members of Congress on both sides of the aisle to advance pragmatic solutions that enhance the private market, improve patient access to care and foster the development of innovative medicines."
The industry has seen the handwriting on the wall and been bracing itself for some kind of change in pricing in the U.S. Novartis CEO Joe Jimenez said last summer that he expected pricing pressure in the U.S. to only increase with a new administration regardless of who won. “We all have to plan for new pricing models in the U.S. that could help us ensure the sustainability of the system as the population ages,” he said at the time.
Editor's Note: The story was updated with a comment from PhRMA CEO Steve Ubl.