Politics

Trump tweets a new vow to spur competition in the pharma biz, slashing prices

President Trump has a reminder for the biopharma industry today: He hasn’t forgotten you or the controversy over drug prices.

This latest tweet from the president of the United States underscores Trump’s repeated insistence that the federal government can ratchet down healthcare prices by fostering competition.

Trump proved that he can still send a jolt through industry shares. Both the IBB and XBI dropped more than a point on the tweet, then started recovering somewhat. The president’s social media pronouncements don’t have the same bite as we saw in the days after his inauguration.

This latest tweet is also long on promise and short on details. And it’s the details — like Trump’s pick for FDA commissioner — which people in the industry want to see now.

Trump’s brand of change may come through a reformed FDA, where he’s insisted that deregulation can make a big difference in reducing the amount of time and money spent on drug development. Or Medicare could be rejigged to allow for price negotiations which have been barred by law.

Or all that and more could be included.

I’ve found many execs in biopharma believe that the drug industry is plenty competitive as it stands. Also, there’s been little evidence that faster development will reduce the cost of new drugs.

Umer Raffat at Evercore ISI had this to say:

Question really is:  what does that mean?  Recall that President Trump has previously made references to “bidding”.

There are 2 types of competition:

1.   Brand vs generic – this already exists (and in fact, market forces drive generics to have very fierce pricing wars)

2.   Brand vs brand – for this to happen, you need interchangeable branded products … e.g., just because 2 drugs are approved for same indication doesn’t make them direct “competition”

o   For true “competition” among brands, you need:

§  Multiple drugs in same class

§  Same indication

§  Same route of administration

§  Similar efficacy

§  Similar safety

o   Some therapeutic areas have this … but not all

Most importantly, many therapeutic areas with generally interchangeable branded products are already under Part D … and have formulary tiers etc. 

And that’s the ultimate question:  is the President referring more to Part B (where no formularies exist currently)?  Reality is, we just don’t know until something definitive is put out

Meanwhile, pharma may have some negotiating leverage with the Trump administration because of the ability to pitch a job-creation plan … e.g., look at this tweet (also from today):

One suggestion from Jim O’Neill, a former HHS official under Bush who is evidently under consideration as the new head of the FDA, could have an impact on pricing. He has said in the past that drugs proven to be “safe” should be put on the market so that people can find out for themselves how effective it may be.

A slew of new drugs hurried out under those standards could start competing with established drugs — we just won’t know if they’re worth anything at all.


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