Is Trump the First Crack in the Drug Industry’s Right Flank?

December 20, 2016

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Source: STAT

Donald Trump is unorthodox, to say the least, when it comes to his opinions about the drug industry.

The GOP has historically been a staunch ally for drug companies. But during and after the campaign, the Republican president-elect has sworn he would bring down drug costs, flirting with policies that sound more in line with Bernie Sanders than Paul Ryan.

Trump’s ascent is now generating whispers at the highest levels of industry about whether the Republican Party will remain a bedrock of support. Is Trump an aberration — or is he a sign of things to come?

“I actually think the Republican Party is a far less certain bet for the pharmaceutical industry,” said one high-ranking industry official, who spoke on condition of anonymity to speak candidly. The official cited “the rise of populism in both parties, particularly populism in the Republican Party.”

“I’m not sure what the future of the Republican Party looks like,” the official added. “It’s not the safe bet it always was.”

The red flags went up when Trump, during the campaign, endorsed the notionthat Medicare should be able to directly negotiate the prices it pays for drugs — a policy that is favored by many Democrats, but is anathema to most conservatives and to the industry. After the election, he reiterated his desire to bring down drug prices.

Last week, Democratic Senator Amy Klobuchar of Minnesota cited Trump’s position on Medicare negotiations as one reason he could be an ally to her party in the fight to lower drug costs.

To some, a splintering between the GOP and the drug industry has been years in the making, starting with the industry’s deal with Democrats to help pass the Affordable Care Act in 2009. Trump is just the first visible crack.

“I think the pharmaceutical industry’s instinctual alignment with Republicans is less tight than it was because of the ACA,” said Len Nichols, director of the Center for Health Policy Research and Ethics at George Mason University.

Not everybody shares that view, and there’s good reason to think that the drug industry still has substantial influence on Capitol Hill.

The 21st Century Cures Act, the biomedical research bill that just passed Congress with 392 votes in the House and 94 votes in the Senate, included numerous provisions that will help drug makers expedite drugs through the approval process.

Some people who represent pharma and biotech firms in Washington held up that overwhelming bipartisan vote as evidence that drug companies still enjoy broad support. They dismissed any concerns about cracks on the industry’s right flank.

“Well, I’m not sure who would think that,” Jim Greenwood, a former Republican congressman who now heads the Biotechnology Innovation Organization, wrote in an email. He said the Cures legislation “showed we can be accomplished when both parties and all the healthcare stakeholders sit down and work together toward a common goal.”

On the other hand, almost all of the 20 GOP votes against the bill came from the Freedom Caucus, the legislative descendent of the tea party movement and a precursor to Trump’s anti-establishment message. They opposed the so-called budget gimmicks that helped pay for funding increases for the Food and Drug Administration and the National Institutes of Health, two agencies with longstanding industry support.

The Freedom Caucus members are free-market conservatives, even libertarians. They aren’t going to suddenly advocate for single-payer health care. Nonetheless, the industry official cited Trump and the Freedom Caucus as warnings signs for the industry about the future of the GOP.

And some of its members have shown their skepticism toward the drug industry — and big business interests generally — in other ways.

During a recent oversight hearing, Congressman Mick Mulvaney of South Carolina, a Freedom Caucus member whom Trump has nominated to lead the Office of Management and Budget, chided Mylan CEO Heather Bresch. He said that the company, by lobbying lawmakers on legislation designed to boost the sale of EpiPens, had invited the criticism it received for raising the price of the devices.

“You came and you asked the government to get in your business,” Mulvaney said. “You get a level of scrutiny and a level of treatment that would ordinarily curl my hair, but you asked for it.”

That scrutiny has been pushed by some more mainstream Republicans, too. Senator Chuck Grassley of Iowa and House Oversight Chairman Jason Chaffetzhave convened hearings and sent written warnings over the last year in the wake of explosive scandals involving EpiPen and Martin Shkreli.

Aware of this new political reality, the industry is trying to behave. Several major firms have pledged that they won’t raise prices too quickly, and many recognize that the best option may be for them to police themselves.

“We’re minding our p’s and q’s,” the industry official said. “We don’t need to give our enemies fodder.”

But all it takes is another Martin Shkreli or EpiPen to turn the heat back on drug makers.

The president-elect has already shown that he has an itchy Twitter finger. And he could inflict real damage on drug makers without advocating for specific policy changes. After he told TIME magazine earlier this month that he wanted to bring down drug prices, biotech stocks fell several percentage points.

“They’re only safe as long as they’re not stupid,” one lobbyist, more of a drug-pricing hawk, told STAT recently.

Some conservative policy experts see Trump’s iconoclasm as an opportunity to shift the conversation to one about value-based health care. That’s a discussion that the industry seems ready to engage in, arguing that effective treatments help save money in the long term.

The thinking goes that Trump is shining a light on a problem — the inefficiencies in the market that lead to high drug costs, including overregulation — but that he can be persuaded, as a businessman, to pursue market-based solutions to those problems.

Dr. Joseph Gulfo, executive director of the Lewis Center for Healthcare Innovation and Technology at Fairleigh Dickinson University, who has advocatedfor an FDA overhaul, said he took the president-elect’s concerns about drug costs “seriously but not literally” — a play on one popular explanation for why a man with a history of controversial statements still won the White House.

“When he says that Medicare should be able to negotiate drug prices, what he’s saying is drug prices are too high,” Gulfo said. “There are market solutions to that.”

“I think a lot of people do hear that and they get frightened,” he continued. “I don’t get frightened. I look at it as a conversation-starter.”

The drug industry is publicly making the same case.

“President-elect Trump is very adept at picking up on the frustrations of everyday Americans,” BIO’s Greenwood told STAT in an email. “I have confidence that, as a businessman, President Trump will understand the realities of our challenging investment environment and will want to promote policies that accelerate and not impede our innovative industry.”

But privately, others aren’t so sure.

“Yes, Trump’s pro-business, but is he pro-pharma?” the industry official said. “People don’t really know the answer to that.”

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