It's been more than a year since then-president elect Donald Trump said pharma was "getting away with murder," blasting the industry's corporate lobbying power and calling for "competitive bidding" to reduce pharmaceutical prices. On Friday, in a promised speech delayed twice, the U.S. public finally has a chance to see how sincere he was.
Not so much, if Friday morning chatter bears out. While on the campaign trail, candidate Trump crossed a party line and called for Medicare Part D negotiations to throw the weight of the U.S. government's purchasing behind efforts to slash prescription drug prices. Now, President Trump doesn’t support the idea, according to press reports on Friday.
Instead, Trump's plan—dubbed "American Patients First"—includes measures that are far more friendly to branded drugmakers; they'd be designed to step up generic competition, encourage outcomes-based pricing, reduce out-of-pocket costs for patients and set up incentives for lower list prices, according to analyst and press reports. Though the aim would be lowering drug prices, the ideas are more gentle than they might have been—and short of anything that could really rattle drugmakers.
Indeed, many Big Pharma stocks were trading up modestly Friday morning.
And the plan apparently will take on one of pharma's favorite scapegoats, the pharmacy benefits manager. During a CNBC interview on Friday, Alex Azar, secretary of the Department of Health and Human Services, said the administration will focus on the role PBMs play in the current pricing system. Drugmakers have blamed PBMs for pushing up list prices by demanding bigger and bigger rebates that feed payer profits rather than saving patients money.
Pharma companies can expect scrutiny, however, for patent abuses and regulatory "gaming" that holds off generic competition, he said.
Azar said the U.S. has a "systemic problem" with drug pricing because "every incentive" pushes higher prices. Pharma, PBMs and other players benefit when prices rise, he said, as patients and taxpayers suffer; the plan will offer incentives to lower list prices, he added.
While Azar didn't get into details, he said the plan will be "bold and creative" and the "most comprehensive plan to attack prescription drug affordability" proposed by any president in U.S. history.
Ahead of the president's big speech, congressional Democrats held their own press conference on Thursday to talk up their "Better Deal" pricing proposals. They're backing Medicare price negotiations—suggesting the idea could become a 2018 campaign issue—and proposing legislation requiring companies to justify big price hikes with data. They also pitched a drug pricing "enforcer"—an official nominated by the president and confirmed by the Senate—to investigate and fine companies for large price hikes.
PhRMA, the industry's top lobby group, has been working hard to help lawmakers and the Trump administration see its side of the pricing debate. As part of a multiyear battle over prices, it's pointed blame at the supply chain and, last year, boosted its lobby spend by 30% to work on patent and importation issues, Medicare negotiations and more.
Along the way, the president named a former Eli Lilly executive, Alex Azar, to his top healthcare post, and nominated an industry favorite for the FDA commissioner position. Early this year at the J.P. Morgan Healthcare Conference, Eli Lilly CEO David Ricks said that with people in office who understand the industry's perspective of rewarding innovation, this year is the "time for action" on drug prices.
In the absence of drug pricing action in Washington, D.C., many states have taken the issue into their own hands in recent months and years. California, Oregon, and Nevada are among the states to have passed pricing legislation, while dozens of other states are considering plans of their own.