The Emerging Outline of Trump’s Deal with Pharma

Guest post Ken Perez, vice president of healthcare policy, Omnicell.

Ken Perez

During the 2016 presidential campaign, Democratic candidate Hillary Clinton reiterated the longstanding Democratic pledge to allow Medicare to negotiate drug prices and demand higher rebates for prescription drugs. In response, and aware of the general public’s mounting concern about rising prescription drug prices, Donald Trump shifted to the left and repeatedly called for Medicare to directly negotiate drug prices. For example, at an MSNBC town hall on Feb. 17, 2016, Trump said, “If we negotiated the price of drugs, Joe, we’d save $300 billion a year.”

However, none of Trump’s three most substantive policy statements issued in the fall of 2016—including the healthcare section of the Trump-Pence Campaign website, his “Contract with the American Voter,” and his healthcare plan issued two days after the election—mentioned the challenge of rising drug prices or the idea of Medicare negotiating drug prices with pharmaceutical companies.

On Jan. 31, 2017, President Trump met with a group of pharmaceutical industry executives, including the CEOs of Amgen, Celgene, Eli Lilly, Johnson & Johnson, Merck, and Novartis, as well as Stephen Ubl, head of the Pharmaceutical Research and Manufacturers of America (PhRMA).

While during the meeting Trump called drug prices “astronomical” and said, “We have to get prices down for a lot of reasons … for Medicare and Medicaid,” he stopped short of the aforementioned negotiation of drug prices by the federal government. Trump pressed the pharmaceutical companies to bring drug manufacturing and production back to the United States. In return, Trump pledged to work to reduce corporate taxes, support deregulation, and streamline the FDA to expedite drug approvals. One can interpret those broad statements as a draft outline of the deal with pharma that will be struck by the Trump administration.

Where would such a deal leave the drug pricing issue? While Trump clearly expressed concern about high drug prices, the drug makers can offer him something else that he may want even more: jobs for U.S. workers that come from boosting production at existing plants and opening new plants on U.S. soil. Imagine the photo ops!

Also and more fundamentally, there is a philosophical inconsistency between the idea of the federal government negotiating drug prices with pharmaceutical companies and the Trump administration’s strong advocacy of deregulation.

Thus, when the dust has settled on the repeal and replacement of the Affordable Care Act, look for leading drug makers to tout how they are exercising voluntary pricing restraint for certain high-profile drugs. But those will be largely symbolic gestures designed to score public relations points.

It is in vogue to describe President Trump as a populist, but he is also a pragmatist who, in spite of being a political novice, understands Otto von Bismarck’s dictum, “Politics is the art of the possible.” He will likely have to settle for a suboptimal outcome in his dealings with pharma as he learns the Beltway’s version of the art of the deal.

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