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Losing “Scalps”? Despite Pharma Fear, A Split on Trump Rx-Price Plans

Xconomy National — 

Despite angry presidential tweets and other anti-pharma rhetoric, the drug industry has benefited under the Trump administration, thanks in part to a massive corporate tax cut.

Indeed, for nearly two decades, the industry has been able to fend off its critics and gain win after win from politicians and regulators, including tax holidays, faster drug approvals, and more. But the party might be coming to an end, according to Jim Greenwood, the head of the Biotechnology Innovation Organization, one of two major trade groups representing biopharmaceutical companies. “These are dangerous times,” Greenwood said during a panel discussion at the BIO CEO & Investor Conference in New York on a snowy Tuesday.

The drug industry’s public reputation has been dreadful for many years. Politicians are now poised to turn that public anger into investigations and industry-reforming policy. Congress, with 100 new members, is ripe for a fight. Democratic presidential candidates are talking about drug price reform as a top priority.

Trump’s FDA commissioner Scott Gottlieb has pushed for broader access to more generic and biosimilar drugs. But beyond FDA regulations, the administration only in the past year has begun to add substance to Trump’s rhetoric. First was a broad “blueprint” to lower drug prices. Then came two major proposals to reduce drug prices: an international drug price index, and elimination of the secretive rebate deals between payers and drug makers.

This afternoon, the panel spent most of its time discussing these two proposals. Even though Greenwood led off with dire warnings—the president is “hell bent on putting our scalps on the wall,” he said—the consensus was that while one of the two Trumpian proposals was terrible for the industry, the other was, in fact, really good.

It should be noted that the panelists were all involved in the drug industry in one way or another. No one from the insurance field or the pharmacy benefit business—the negotiators who represent insurers and large employers in drug-price talks—was present. With that in mind, here’s a rundown on the panel’s reasons for dissing one Trump plan and embracing the other.

NO TO FOREIGN PRICE CONTROLS

In October, the administration proposed to set U.S. drug prices to a benchmark of prices from 16 other countries—among them Canada, the U.K., and Japan. This international index would apply to medicines under Medicare Part B, which are administered in clinics and hospitals. Many expensive drugs, like those infused into cancer patients, fall into this category.

Human Health and Services secretary Alex Azar has been pitching the plan to senators, and a similar idea is in development in the Democrat-led House.

The biopharma industry and its allies, which knocked back an Obama-era proposal to rein in Part B prices, remain dismissive. “What a stupid idea,” said Peter Pitts, president and co-founder of the nonprofit Center for Medicine in the Public Interest, and a former communications executive at the FDA.

Pitts noted, for instance, that Greece only supplies a small fraction of the cancer drugs that have been invented over the last decade to its citizens, where the number is far higher in the U.S. How can you set the U.S. price of a drug based on countries that might not supply that drug to its own citizens? Pitts asked.

The biopharma industry also says the index will siphon away cash that could be used to make innovative new drugs. Azar was a top drug executive at Eli Lilly (NYSE: LLY) and a BIO board member before Trump tapped him to be the U.S. HHS secretary. In his new job, Azar says his former colleagues’ fears are exaggerated. The measure would only impact, at most, 1 percent of yearly R&D spending, he has said. If companies can’t make up that difference by negotiating higher prices in Europe and Japan, “they need new people doing the negotiations,” Azar told an audience at a different BIO gathering last fall.

Panelist Duane Schulthess, managing director of consultancy Vital Transformation, has crunched the numbers and found otherwise. For example, a price cut to … Next Page »

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