BioPharm Executive: Is Biotech "Getting Away With Murder?"
Published: Jan 26, 2017
January 25, 2017
By Karl Thiel for BioSpace.com
Or getting murdered itself?
Well, here we are, just a few days into the Trump presidency, and the relationship between the life sciences industry and the Oval Office is uneasy at best. On January 11, in his first press conference since winning the election, Trump called the drug industry "disastrous," and said it was "getting away with murder."
His comments seemed to refer to everything from tax inversions to his apparent belief, in the face of all evidence, that vaccines might cause autism. But it was made with particular reference to drug pricing and his proposal that the government negotiate purchase prices with manufacturers. That's a position that, as I've noted many times before, he shares with former rival Hillary Clinton.
In a sense, it couldn't have come at a worse time—right in the midst of the traditional kick-off to the biotech year, the J.P. Morgan Annual Healthcare Conference. Until that moment, the industry had been riding a small wave of positive clinical news and business developments, entering JPM on a high note. The Nasdaq Biotech Index was up over eight percent year-to-date—a move made in just six trading days—and then immediately fell three percent in the wake of his comments.
But that's small picture stuff. The more interesting aspect to this news—and what follows—is the cognitive dissonance it is causing. (And I count myself among those affected). Let's count the ways:
Likening the industry to "murderers" is hugely irresponsible. But is anyone really surprised? This is classic Trump stuff. Still, I'm of two minds concerning the likely impact. Mostly I think that it is simply Trump's red meat populism: He knows prescription drug prices are a hot button issue with consumers, so he tells people what they want to hear. Saying the words means he can actually do something largely symbolic (see "Trump saves jobs at Carrier" for another example) and proclaim victory. And at the same time distract from moves that may prove less popular.
Yet I'm also mindful of the tendency I've seen for people to say "aw, he doesn't really mean it…" concerning Trump's various outbursts. He's been talking about drug pricing on and off for a long time now; it's probably worth taking him seriously.
Yet his rhetoric is having a bracing effect on the industry. I've been saying for years that industry needs to police itself on drug prices or risk having the control taken out of their hands. Now more executives have picked up on that point. Allergan CEO Brent Saunders, who has warned that Trump could turn out to be more "vicious" on drug pricing than Clinton would have been, pledged to limit price increases to a single digits and offered an expanded patient access program. Mylan CEO Heather Bresch, who has felt a lot of pushback from her company's drastic increase of EpiPen prices, took to the stage in San Francisco to insist that the "pricing model has to change," although she was vague on specifics. Regeneron CEO Leonard Schleifer has become increasingly vocal about drug hikes being used to cover for lack of innovation.
But it may be too little too late when it comes to avoiding legislation, which is almost sure to have some unforeseen and unwanted consequences.
Ridiculous rhetoric aside, Trump is with the Democrats on this one. Direct Medicare negotiation on drug prices has been a Democrat policy point every since Part D was passed in 2003. And it has been adamantly opposed by Republicans and the drug industry. Will Republicans continue to oppose the idea when it comes from their president? Will Democrats back Trump? How many heads will explode? Just last month, Senator Bernie Sanders tried to attach a bill allowing direct Medicare negotiation to the 21st Century Cures Act, billing it as a "Trump proposal." Republicans shot it down then, but their main argument was that it didn't belong in that particular bill. We'll see how many peel away in the months ahead.
One extra piece of cognitive dissonance: Allowing Medicare negotiation of drug prices is a policy championed by Democrats, but if you survey citizens, it is hugely popular among Democrats and Republicans alike. All the same, it is far from clear that it would have the desired effect.
It's the beginning of a bumpy ride.
Read the BioPharm Executive online newsletter January 25, 2017.
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