Trump health care plan likely good for pharmaceutical firms

Pharmaceutical firms look like hopeful about their growth under a Trump administration, after former President Joe Biden took a hardline stance on the industry for the last 4 years. 

Like his predecessor, President Donald Trump will make lowering health-care costs for Americans a priority. It’s a well-liked bipartisan issue in a nation where patients pay two-to-three times more for prescribed drugs than people in other developed countries. Trump has not yet outlined specific health policy plans, but his latest administration will likely take a unique, more pro-business approach than Biden’s did. 

Drugmakers hope Trump will focus more on cracking down on middlemen called pharmacy profit managers, while taking heat off the costs the pharma firms themselves charge, promoting drug innovation and improving patient access to treatments. Those firms are particularly desperate to see changes to Biden’s Inflation Reduction Act, which incorporates landmark provisions that aim to make medicines more cost-effective — but that the industry views as a threat to innovation and its profits. 

That was the sentiment throughout the JPMorgan Health Care Conference in San Francisco this month, the most important gathering within the U.S. of pharma and biotech executives and investors. The annual conference gives a pulse on the industry’s outlook for the yr ahead. To no surprise, health policy questions dominated lots of the conversations as Trump was heading into office.

Trump is not exactly a friendly face to the U.S. pharmaceutical industry, as he targeted firms and high drug costs during his first term through proposals like linking government payments for medicines to lower prices paid abroad. Still, executives stressed they’re able to work with Trump, who some described as being willing to listen to out their grievances. 

“There are several people who think for our industry, the risks outweigh the opportunities. There are other people, amongst them myself, which they think that the opportunities outweigh the risks. I assume we’ll see,” Pfizer CEO Albert Bourla said during a presentation on the conference. 

“What we do as an industry, and as Pfizer, is engage with the brand new administration,” he later added. “Now we have very productive engagements and we try to elucidate the positions, I feel which are well-understood.” 

Still, some executives acknowledged uncertainties around the brand new administration, reminiscent of the anti-vaccine views of Robert F. Kennedy Jr., Trump’s pick to steer the Department of Health and Human Services. Health experts have said that Kennedy, if confirmed by the Senate, may not do much to stop vaccine approvals, but could deter more Americans from taking advisable shots.  

“I feel he represents the caution in relation to the Trump administration,” BMO biotech analyst Evan Seigerman said. “You bought to determine the right way to work with him, right?”

Congress stripped out bipartisan PBM reforms in the ultimate federal government spending package late last yr, even after lawmakers for years introduced bills and held hearings to scrutinize them. 

However the pharmaceutical industry is “optimistic” that it’ll see PBM reform this yr, as Trump, lawmakers and lawmakers from each parties are concerned about their practices, said Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, the industry’s biggest lobbying group within the U.S. 

“I feel there continues to be significant momentum behind PBM reforms, and there will likely be … legislative vehicles available this yr to maneuver them forward,” Ubl said in an interview with CNBC. 

He also pointed to a previous Trump proposal that the president could revisit: To eliminate the so-called protected harbor for rebates – a rule that sought to stop PBMs from keeping rebates and as an alternative make sure that any discounts from drugmakers would directly reach patients.

Trump has signaled that he’ll goal PBMs, saying at a news conference in December, “We will knock out the middleman. We will get drug costs down at levels that no one has ever seen before.” 

But Trump still has to determine if he’ll change the Biden administration’s approach to PBM reform, said Seigerman. Biden’s FTC Chair Lina Khan carried out an intensive investigation into the middlemen after which sued them for allegedly inflating insulin prices.

“The proven fact that it was a Lina Khan priority makes it harder for Trump because he’ll either outright reject something from the Biden administration or say, ‘We did it higher,’ and take full credit,” Seigerman said.

Ubl pointed to 3 key reforms the industry desires to see, the primary of which is “breaking the link” between a drug’s list price and the way PBMs are compensated. 

Currently, the upper price of a covered drug leads to greater potential rebates that PBMs can keep as profit. That incentivizes the middlemen to steer patients toward higher-priced medicines and keep cheaper generic and biosimilar drugs off of insurance formularies, or lists of covered drugs, in accordance with Ubl. 

The second reform is to make sure the rebates reach patients on the pharmacy counter, which might be achieved by reviving Trump’s previous proposal or through other policies, Ubl said. The last reform can be increasing transparency across the PBM business model, reminiscent of the rebates they collect and their markup practices, because it is “largely opaque” to insurers and other stakeholders, in accordance with Ubl. 

“We all know the provision chain, PBMs are usually not transparent enough and we should always give you the option to go through more of that savings on to consumers,” Eli Lilly CEO David Ricks said during a presentation on the conference.

PBMs deny that they contribute to higher drug prices, and infrequently shift the blame to drugmakers who set the initial list prices for drugs before negotiations. Cigna’s Express Scripts, one among the three major PBMs within the U.S., has claimed that it passes greater than 95% of all rebate dollars to its health plan clients.

Top PBM executives have also said they’re open to increased transparency around their businesses, but firms have yet to make significant changes on that front.

The pharmaceutical industry can also be hopeful that Trump could work with Congress to revise a chunk of the IRA that enables Medicare to barter drug prices with manufacturers — a well-liked policy that would bring significant savings for senior patients. The Biden administration kicked off the second cycle of that process last week, unveiling the next 15 drugs chosen for the worth talks. 

But dismantling or scaling back the IRA can be difficult, Seigerman said. He pointed to Trump’s unsuccessful attempt to repeal and replace the Inexpensive Care Act during his first administration, even when he had control of the House and Senate. That law expanded insurance coverage for uninsured patients. 

Health policy experts previously told CNBC that it also seems unlikely that a Trump administration would need to scrap efforts to lower drug prices, a bipartisan issue that’s top of mind for Americans.

Still, the industry will proceed to fight the law in a flurry of legal challenges, which have up to now been unsuccessful. Drugmakers argue that the availability will slash their profits, hinder investments in research and development for certain medications and lead to unintended consequences for patients, reminiscent of fewer treatments and better premiums. 

The industry also argues the method is government-mandated “price-setting” somewhat than negotiations since firms that do not conform to the talks must either pay an excise tax or withdraw all their medications from the Medicare and Medicaid markets. Though in a single failed court challenge last yr, a federal judge argued that participating in those markets is voluntary. 

PhRMA’s Ubl said the most important issue with the law is what the industry calls the “pill penalty.” The law essentially spares biologics like vaccines from latest negotiated prices for 13 years after they receive U.S. Food and Drug Administration approval, in comparison with just nine years for small-molecule drugs that are available in a pill or tablet form. 

The industry argues that the discrepancy discourages firms from investing in the event of small-molecule drugs, that are more convenient for patients.

Fewer small molecule drugs will likely mean fewer cheaper generic versions of them in the marketplace within the U.S., Eli Lilly’s Ricks said throughout the conference. 

“I feel that is a terrible consequence because that is probably the most efficient, most cost-effective thing entering into health care,” he said.

A revision of the law would require legislative motion, but Ubl said some changes could happen without Congress. For instance, PhRMA doesn’t imagine all drugs with the identical lively ingredient must be up for price talks after they are approved under different names for various uses.

That was the case last week when Novo Nordisk’s weight reduction drug Wegovy, diabetes treatment Ozempic and one other diabetes drug Rybelsus were chosen as one product for the worth talks since they share the identical lively ingredient.

Kennedy has long made misleading and false statements concerning the safety of vaccines, which have saved the lives of greater than 1.1 million children within the U.S. and saved Americans $540 billion in direct health-care costs during the last three a long time, in accordance with CDC research in August. Despite his history, Kennedy told NBC News in early November that he is not planning to take anyone’s vaccines away within the U.S. 

But Kennedy could affect vaccine uptake without making federal policy changes. For instance, some health policy experts have raised concerns about Kennedy using his latest potential platform to spread anti-vaccine rhetoric and deter Americans from receiving advisable shots at a time when vaccination rates are already falling, especially amongst children.

“He’s very anti-vax, which is not great,” Seigerman said. “That is not good for an organization like Pfizer or Merck or GSK – all the oldsters that make the vaccines that we use.” 

During his presentation on the conference, Pfizer’s Bourla said Kennedy’s anti-vaccine rhetoric is in “complete contradiction” with what the corporate, regulators and the medical and scientific community imagine. Pfizer delivered the world’s first Covid vaccine and markets shots for other diseases, reminiscent of respiratory syncytial virus and pneumococcal disease. 

If Kennedy contributes to even lower U.S. vaccination rates for certain diseases, “we’ll start having epidemics and that will likely be detrimental for him and for the administration,” Bourla said, adding that he has “made that very clear” to them.  

But Bourla said the corporate can work with the administration in other areas, noting that Trump is “very much focused” on cancer. Bourla said he sees the potential to construct programs that can speed up development of cancer treatments. 

Drugmakers are more aligned with Kennedy’s goal of tackling chronic diseases within the U.S. as a part of his “Make America Health Again” platform, which appears to have a specific emphasis on changing U.S. food policy. 

Gilead CEO Daniel O’Day told CNBC that the corporate’s work aligns with the administration’s concentrate on chronic diseases. Gilead is a pacesetter in HIV treatment and prevention having developed 12 medications for the disease. 

“For Gilead Sciences, it means medicines that we spoke about that might be the most effective tool to finish the epidemic or another medicines,” O’Day said.

During his presentation, Eli Lilly’s Ricks said making America healthy again is “what we do day-after-day.” While weight loss plan and exercise help to stop obesity, he contended those lifestyle changes are “somewhat ineffective” at treating the disease in comparison with the corporate’s drug Zepbound. 

Ricks said, “If there’s common ground there,” Eli Lilly would love to work with the Trump administration to expand access to obesity medications and “discover a approach to pay for them.”  

The Biden administration has proposed allowing Medicare to cover obesity drugs, which have roughly $1,000 list prices before insurance, nevertheless it is unclear if Trump will finalize that plan. 

Still, Ricks said the Trump administration has been receptive to Eli Lilly’s ideas, which is “a little bit of a change from the last 4 years.”

CORRECTION: This text has been updated to reflect that Novo Nordisk is the maker of weight reduction drug Wegovy, diabetes treatment Ozempic and diabetes drug Rybelsus.