Sector News

How will pharma get along with a protectionist President Trump?

November 9, 2016
Life sciences

Actual issues didn’t get much play during this year’s contentious, invective-filled presidential campaign. But when the election spotlight did focus on policy rather than personality, it spent a disproportionate amount of time on prescription drugs. The high price of prescription drugs, to be specific.

By November, the American people didn’t agree on much, but they did agree on one thing: Drug prices should be high on a new president’s to-do list, even higher than Obamacare, according to a poll by the Kaiser Family Foundation.

Now, it’s up to President-elect Donald Trump to craft that to-do list, and drug prices didn’t rate nearly as highly, issue-wise, as they did for his Democratic rival Hillary Clinton. Repealing Obamacare, on the other hand, was a signature promise. Indeed, drug stocks were up premarket Wednesday morning as fears of a government drug-pricing crackdown lifted, with Big Pharmas like Pfizer (up 9.5%) and Merck & Co. (up 5.5%) among the leaders. Mylan, at the center of the EpiPen controversy, saw shares rise 6% early in the day, and Valeant shares jumped 4.8%.

But drug pricing action of some kind is still likely, analysts say, perhaps as part of an Obamacare overhaul. On Medicare Part D, “Trump’s position is identical to Clinton’s,” Evercore ISI Group analyst Terry Haines said via email; the president-elect believes price should be part of the equation in Medicare coverage negotiations. “Trump can make inclusion of that a condition of signing an [Affordable Care Act] reform bill.”

In January, Trump told a crowd of 1,000 people in Farmington, NH, that Medicare could save $300 billion a year by negotiating discounts. “We don’t do it,” Trump said. “Why? Because of the drug companies.”

Trump favors another cost-saving move that has repeatedly failed in Congress, and could conceivably include it in ACA reform, too: drug reimportation, which would allow Americans to buy their prescription meds from other countries where prices are lower. Drugmakers are set against reimportation in the U.S.; after all, their sales have suffered from similar parallel trade within the EU.

Meanwhile, Trump’s trademark issue–trade–could have more wide-reaching effects on the pharma industry, if he follows through on his radical anti-free trade promises. The pharma market is global, heavily reliant on foreign sales and on products manufactured outside the U.S., including China, which Trump has specifically targeted. Drugmakers want more free trade, not less; just witness Big Pharma’s backing of the Trans-Pacific Partnership (TPP), a sweeping agreement that Trump has denounced as all but evil.

“These trade deals are lifeblood for the protections of the intellectual property that pharma maintains,” Dan Mendelson, president of the consulting firm Avalere Health, told Fortune in August. “When you start going in and saying we’re going to rip these up, you upset the balance.”

Presidents have far more authority to act directly in international trade than they do to push action domestically, and Congress has less power to interfere, trade experts say. Trump has pledged to walk back the North American Free Trade Agreement, which would raise barriers to pharma’s cross-border operations in Mexico and Canada. He’s said he’d withdraw from the World Trade Organization. TPP would be dead. Other open-market moves, ditto.

Theoretically, U.S. tariffs and other protective measures encourage export and discourage imports; they would incentivize companies to make their products in the U.S. for consumption in the U.S. market. It’s complicated to transfer manufacturing of any product, but for prescription drugs, the hurdles are enormous, and all manufacturing changes are regulated by the FDA.

And trade agreements are far more important in pharma than in many other industries: They’re not just about the flow of goods, but about intellectual property protections, too. Trade deals help ensure that pharma’s proprietary data and products remain so.

Pharma backed the TPP, for instance, partly because it would strengthen patents in countries where protections are weaker than they are in the U.S. Some of the fastest-growing pharma markets in the world would be covered by that deal. China was not, and nor was India, partly because it feared its own pharma industry would suffer. That’s the country, after all, where officials have revoked some drug patents and, in one case, forced a Big Pharma company, Bayer, to allow a generics maker to knock off its cancer drug Nexavar.

Trade could thus shape up to be a bigger conflict with the new president than drug pricing. While private payers will continue to put the squeeze on pharma in the pricing realm, drugmakers and their advocates will have to figure out how to work with–or against–Trump on trade. That could be touchy, Mendelson told Fortune. “Every health care group in Washington is feeling very ginger about picking its battles,” he said. “If you criticize him, you make yourself the subject of his ire.”

By Tracy Staton

Source: Fierce Pharma

comments closed

Related News

January 29, 2023

Colorcon, Inc. signs Put agreement with intent to acquire controlled atmosphere packaging specialist Airnov Healthcare Packaging

Life sciences

Airnov provides critical healthcare industries with high-quality, controlled atmosphere packaging, to protect their products from moisture and oxygen. The business has manufacturing facilities in the USA, France, China and India and employs around 700 people.

January 29, 2023

Takeda pledges up to $1.13B for rights to Hutchmed’s cancer drug fruquintinib outside of China

Life sciences

Takeda of Japan has partnered with Hong Kong-based Hutchmed, gaining the commercial rights to colorectal cancer drug fruquintinib outside of China for $400 million up front, plus $730 million in potential milestone payments. Takeda also will help develop fruquintinib, which can be applied to subtypes of refractory metastatic colorectal cancer, regardless of biomarker status, the companies said.

January 29, 2023

Vir taps Bayer dealmaker Marianne De Backer as its next CEO

Life sciences

On April 3, Scangos, who’s been chief executive officer at Vir since the start of 2017, will hand over the reins to Marianne De Backer, Ph.D. De Backer comes over from Bayer, where she currently heads up pharmaceutical strategy, business development and licensing. Alongside her CEO appointment, De Backer is set to join Vir’s board of directors, the company said Wednesday.

How can we help you?

We're easy to reach