Trump's drug price 'remedy' expected to be industry friendly

By SARAH KARLIN-SMITH 06/16/2017 08:33 PM EDT

Candidate Donald Trump made rising drug costs a signature issue during his campaign and beefed up his criticisms after the election, saying in January that the drug industry was "getting away with murder."

The comments unnerved drug executives, but six months later, the industry is no longer in a state of panic.


The administration is not proposing, as Trump did on the campaign trail, that the government negotiate drug prices or allow the importation of cheaper drugs from abroad. At a meeting Friday, top Trump administration officials reportedly made little progress on even on more modest goals that are said to be an executive order on drug prices, which the White House is pushing to release.

The meeting which was led by OMB Director Mick Mulvaney and included top leadership of U.S. health agencies, trade officials and senior Trump advisors like Gary Cohn and Reed Cordish, ended with little agreement.

A White House spokesperson said only that the meeting is "part of the ongoing discussions to reduce the burden of the high cost of drug prescriptions and unleash a wave of innovation to develop cures and treatments for patients."

The bickering among top officials comes amid already low expectations that the White House is willing to take steps that might anger the powerful pharmaceutical lobby.

With Trump still pushing for a quick populist win, some anticipate the administration could take a smaller step next week, such as announcing the FDA will speed generic drug approvals — a move that would spur competition among these cheaper copycats of branded medicines. FDA-centric policies are the one area where there has been more consensus, sources close to the process said.

The administration is not discussing taking “broad action to curb drug pricing," analyst Terry Haines who follows Washington politics for investment bank EverCore ISI said Friday.

“If anything, the limited scope of the discussions should be good news for the pharmaceutical and bio industries and investors because nothing like sweeping action to curb drug prices is under discussion and the industry probably will not view the subjects of the Trump discussions … negatively. “

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There are even some signs the administration proposals under discussion may help -- rather than harm the drug industry.

"Our industry sources indicate that pharma expects it has successfully shifted the dialogue from the high price of innovation to transparency and other parts of the supply chain,” Wells Fargo analyst David Maris wrote in a note to investors Thursday evening. “As such, several drug company executives have expressed the belief that Trump's drug price approach will not include drug re-importation and Medicare negotiation of drug prices."

The industry's growing confidence comes in part from the presence of key allies in the White House: Joe Grogan, OMB's director of health programs, is working on the executive order, according to multiple sources inside and outside of the government. Grogan spent the last five years as the head of federal affairs for Gilead Sciences — the drug company that helped ignite the drug pricing debate in 2013, when it set the price of a new hepatitis C treatment at more than $80,000.

Grogan does not have a White House ethics waiver, meaning that under a policy implemented in January, he is supposed to recuse himself from issues he lobbied on in recent years.

He's not the only administration official who doesn't see eye-to-eye with Trump on drug pricing.

HHS Secretary Tom Price was part of the congressional effort to kill the Obama administration's last-ditch attempt to tackle drug pricing last year through a Medicare pilot that would have paid doctors less for some high cost drugs — such as some cancer treatments — administered in physician’s offices.

The White House may decide to do a "check-the-box" type of exercise, said several sources close to the discussion, for instance, issuing an order that calls for FDA, Medicare and Medicaid and other federal programs to work on drug pricing measures. That would demonstrate Trump's commitment to the issue while more nuanced policies are crafted.

If the order goes into more specifics, most expect it will include a directive for the government to allow agreements between insurers and manufacturers that tie payment for a drug to how well it works.

It's an idea long promoted by the drug industry itself.

Other ideas floated in an OMB list drafted earlier this spring and seen by POLITICO include policies that read like gifts to the drug industry.

One would allow the drug industry to sell products at lower prices to the U.S. territories without having to offer these discounts to Medicaid programs in all 50 states, which is the current requirement.

Others would curtail the Obama administration’s expansion of programs requiring drug companies to provide steep discounts to hospitals and clinics that serve a disproportionate share of low income patients. One suggests pulling a rule that would force certain drugs to be priced at only a penny to such clinics, for example.

Also on the list of ideas are a proposal that would give companies more flexibility to amend drug patents, which could make it harder – not easier -- for cheaper generics to be sold.

The pharma trade policies the administration is looking at are also expected to be relatively industry-friendly, including taking steps to reward U.S. manufacturing or making a stronger effort to go after countries that violate intellectual property protections on drug pricing.

Even if the Trump team wanted to mount an all-out assault on drug makers, there are limits to what they could accomplish without congressional support. That's particularly true when it comes to Medicare and Medicaid — and there few signs Republicans in Congress want to take any major action against the industry.

But Democrats say that Trump has not only failed to deliver on a key campaign vow, he has caved to industry.

"Another broken Trump promise seems to be in the making, with Medicare negotiation abandoned in favor of Big Pharma's wish list," Rep. Lloyd Doggett (D-Texas), who co-chairs the Democrats’ Prescription Drug Task Force, told POLITICO. "In January, two weeks after declaring that drug makers were 'getting away with murder,' Trump was cozying up to pharmaceutical executives at the White House."