The pharmaceutical industry’s day of reckoning may have finally arrived.
President Trump and his administration are determined to move forward on a sweeping initiative to address the rising cost of prescription treatments and, for once, the drug lobby may be unable to block the effort. A blueprint revealed earlier this month contained a number of proposals — some more vague than others — that included allowing further private negotiation in the Medicare program and ending the drug rebate program.
Instead of a direct attack on the plan, Big Pharma hopes to craft policies that would quiet critics while avoiding potentially costly measures drugmakers have long opposed. It’s planning to work behind the scenes with the White House, the Office of Management and Budget and the Department of Health and Human Services to find common ground on the final regulatory proposals.
The head of the industry’s main lobbying group alluded to the strategy earlier this year.
“The real question is what’s the right kind of change?” Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, said at an event in May. “There are proposals in the president’s suite of 50 ideas that have great potential. Everyone needs to come to the table with constructive ideas on how to evolve those proposals.”
It’s a departure from tactics employed in the past decade when the pharmaceutical lobby effectively killed most unfavorable policies through expensive ad campaigns across key congressional markets and grassroots advocacy efforts with industry-backed patient groups.
“The policy of trying to deal with this by defending the high prices, that’s not going to cut it anymore,” Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development, said in a recent interview. “All the stars are aligned right now for something to happen and the industry realizes they have to be part of the solution or they are going to end up with something they are not happy with.”
Companies may find it advantageous to act quickly, too, since doing so could appease a president who often just wants to notch a win. Trump said at a bill signing in May that he expected some pharmaceutical manufacturers to voluntarily lower the price of drugs by a “massive” amount in the coming weeks.
The industry’s shift may also be an acknowledgment of the federal officials who are crafting the Trump administration’s plan. Individuals at the negotiating table for the federal government include former top executives from drug companies like Amgen Inc. and Eli Lilly & Co. who are knowledgeable of the complexities of the current pricing system and have an understanding of the industry’s position.
While key officials such as Health and Human Services Secretary Alex Azar and Food and Drug Administration Commissioner Scott Gottlieb haven’t shied away from criticizing the industry and advancing policy changes, the industry views them as preferable to the potential appointees of a liberal Democrat such as Sen. Elizabeth Warren, who’s viewed as a potential presidential contender in 2020.
“Do you want to negotiate with Azar and Gottlieb or do you want to negotiate with whatever a President Warren puts together in 2021?” asked Craig Garthwaite, director of healthcare at the Kellogg School of Management at Northwestern University. “I think you have a better chance to try to look like you got something done now.”
Developing compromise policy suggestions that will be broadly acceptable across the industry’s different sectors is itself an onerous task. Pharmaceutical companies are fragmented between giant manufacturers who own several blockbuster drugs and smaller biotechnology companies that may produce only one or two specialty treatments.
There is also concern over whether the industry can stay unified during its discussions with the administration. Even a small resistance campaign could impede negotiations, and officials have already warned pharmaceutical companies that the government is prepared to move forward with or without their support.
“We look forward to working with industry to build a better drug-pricing system. But if industry isn’t willing to work with us, President Trump and his administration will keep turning up the pressure — until we have a system that finally puts American patients first,” Azar recently told reporters.
“Drug companies should get on board,” a Health and Human Services spokeswoman added. “If they don’t, we’ll get there one way or another.”
While experts say the Trump administration’s drug-pricing proposal didn’t include any policies that would be immediately damaging to the industry, several could eventually have a drastic impact. Key details have yet to be announced, however, and federal officials acknowledged it may take several months or more to implement complex parts of the plan.
The rising cost of prescription medicines has been a focus of the president since his campaign. Prior to his inauguration, Trump famously said the industry was “getting away with murder.” And onlookers say the sheer number of individuals who are working on the current plan — spread across multiple federal agencies and the White House — is a sign of the administration’s commitment.
But the plan still faces several steep challenges, including elements that contradict each other.
Trump, for example, has repeatedly bashed pharmacy benefit managers who serve as middlemen between the insurance companies and drug manufacturers, a system touted as leading to lower prices. While the administration’s proposal would ding managers, it also seems to suggest giving the industry more influence in the Medicare program by adding additional price negotiations.
And industry is bracing for details on other proposals, like moving some drugs in Medicare Part B, which tend to be high-cost specialty treatments, to the Part D program that allows for private negotiations.
