Pharma unfazed by Trump price-reduction proposals

President Trump’s speech on Friday afternoon had been long-anticipated, ever since he was elected and then hammered the pharma industry with talk over how it was "getting away with murder".

The moment of truth arrived on how drastically Trump would target the industry and the answer turned out to be only in minor ways.

Trump’s rhetoric was still fierce, "The drug lobby is making an absolute fortune at the expense of American consumers – no industry spends more on lobbying than the pharmaceutical health products industry."

He continued by blasting drug price increases, "We are not going to reward companies that constantly raise prices, which, in the past, has been most companies."

However, despite this strong language, share prices across the pharma and biotech rose because the proposals suggested to actually counter the drug price increases and the industry’s lobbying power were deemed relatively mild.

Notable measures were plans to allow Medicare Part D more flexibility on adding generics to formularies and the ability for Medicare drug plans to pay different amounts for the same drug depending on the illness.

In terms of fresh ideas, one was brought forward by Alex Azar, Department of Health & Human Services Secretary, who suggested that there was a possibility of pushing the industry to mention the prices of drugs in its advertising efforts for drugs.

This could potentially stoke a consumer backlash towards companies with higher prices, especially given the climate where the US public is becoming acutely aware of the pricing of medicines after a number of scandals.

Other proposed methods of reducing pharmaceutical prices were to remove the ‘gag clause’ that prevents pharmacists from suggesting medicines with lower price tags.

Also, Trump took another swipe at countries around the world for paying less for drugs or, in his own words, acting to "extort unreasonably low prices from US drugmakers". He suggested that this led to US consumers paying more for their drugs and left them footing the industry’s R&D bill.

This stance has been the most widely discredited, not least because the question of how Trump would force other countries to begin paying more for drugs remains to be seen, but also because companies making greater profit elsewhere wouldn’t automatically make it likely for drug prices to drop in the US.

PhRMA, despite the fairly light measures proposed by Trump, still released a statement expressing doubt over some of the proposals: ""These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments."

Despite the words of concern from the industry lobby, it’s likely that the organisation would have been pleased with the outcome of Trump’s speech given the fears that Trump stoked previously whilst campaigning.

During the election campaign, Trump had discussed allowing Medicare negotiate directly with drugmakers over drug prices or importing drugs from overseas at a lower price. With these strong steps evaded and the tax changes that allowed US companies bring in money from overseas, the pharma industry will likely feel that the current administration holds nothing to fear in the future.

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