Feb 2, 2017

What's likely to happen on drug prices, and what you can ignore

Ron Sachs / Pool via CNP /MediaPunch/IPX

President Trump may have gone from accusing pharmaceutical companies of "getting away with murder" to meeting with the CEOs of those companies but the fight over drug prices is far from over.

What the president has called for in the past — drug price negotiations, presumably in Medicare — is far from the top of the list of what's likely to pass through a Republican-controlled Congress, and he's talking about that less now anyway. Instead, he's aligning more with congressional Republicans in calling for market reforms to create more competition faster.

And while Trump and his Twitter account make predicting what will happen an imprecise science, we've created a list of what's likely to happen on the drug price front, what may happen and what's probably not going to go anywhere.

The short version: If it enhances market competition, it could go somewhere. If it increases the government's role in the pharmaceutical industry, be very skeptical.

Keep in mind: As Senate Minority Whip Dick Durbin told me, "Pharma is a very powerful force on Capitol Hill."

Most likely: A host of policies designed to bring more generic competition to the market. This allows Republicans to achieve the trifecta of supporting pharmaceutical companies, remaining dedicated to free markets and doing something tangible to address the drug price issue.

  • There's lots of talk of speeding up the approval process at the Food and Drug Administration.
  • Some GOP members like Sen. Chuck Grassley, who's well-positioned as chairman of the Judiciary Committee, want to crack down on brand companies' efforts to keep generics off the market.
  • One target could be drug companies that hike the price of old drugs when there's no competition. The idea is to bring competition to the market, and quickly, to prevent them from doing so.

Somewhat likely:

  • Increasing drug price transparency. This could mean asking manufacturers to report on how they set prices or requiring line-item reports of where drug companies are spending their money.
  • Increasing competition in Medicare Part B, which pays for drugs administered in doctors' offices and hospitals.
  • Some kind of trade agreement spreading costs to other countries. This is something Trump talked about on Tuesday, when he said other countries should pay their "fair share" for drugs, but it's not entirely clear what he means.
  • Something targeted at middlemen in the pharmaceutical supply chain. They drive up the prices of drugs, but it's hard to tell what money is going where without more transparency.One interesting thought: Scott Gottlieb, a leading candidate for head of the FDA, has proposed eliminating drug rebates. This would have big consequences for how the supply chain works.
  • A requirement that drug companies provide a justification for big annual price increases.

Less likely:

  • Allowing Medicare to negotiate drug prices. Trump may be talking about that less now, but he's still talking about "bidding wars." So now it's near the bottom of the "maybe" list.
  • Importation of drugs from abroad. A Senate vote on allowing drugs to be imported from Canada failed 46-52 earlier this month. But the interesting part of that vote was how nonpartisan it was — 13 Democrats and 12 Republicans voted with the other party. Members could be persuaded, so never say never.

No way:

  • Any kind of price setting policy.
  • Setting minimum spending levels on research and development. This would be considered overreach into business practices by Republicans.
  • Adding Medicaid-level rebates into Medicare.
  • A Hillary Clinton-style review board with the power to punish companies with unjustified price hikes.

The biggest caveat with any of these is that Trump is unpredictable in his policy preferences. The president — and his Twitter account — could have big sway over public opinion on the Hill.

And the second biggest caveat: Repealing and replacing Obamacare could easily take up the entire health care agenda. On the other hand, prescription drug policy could get wrapped into whatever emerges — in fact, some lawmakers hope it will.

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