President-elect Donald Trump’s recent crowning as Person of the Year by Time was perhaps the least surprising choice for that pick in decades.
But that doesn’t mean there was nothing interesting in the magazine’s profile of the newly elected commander-in-chief. As is usual with Trump, much of the profile was highly quotable, but for those interested in the future of America’s health care sector, one particular section sticks out:
[Trump] also suggests that some stock analysts may have misread his intentions. The value of biotechnology stocks, for example, which enjoy large profit margins under current law, rose 9% in the day after Trump’s election, a rally of relief that the price controls Clinton had proposed would not happen. But Trump says his goal has not wavered. “I’m going to bring down drug prices,” he says. “I don’t like what has happened with drug prices.”
Given the radioactivity of the pharmaceutical industry’s pricing regime and its outsized friendliness with Trump’s erstwhile opponent, this is unsurprising on one level. Nevertheless, given that Trump has charted a more populist course than much of his party on pocketbook issues like drug prices, to see him returning to this particular one is very encouraging.
And not only about Trump! Inherent in Trump’s assurance is a similar likelihood that his HHS secretary-designate, Rep. Tom Price (R-GA), will try to address the same issue. Perhaps recognizing this: Publications like Politico have already begun speculating on what sorts of changes the incoming Trump administration might make to fight rising drug prices.
Some of that speculation hits on well-worn but still welcome areas of policy discussion, particularly in the area of intellectual property. Politico itself fingers patent reform as a potential vehicle for drug price doves within the Trump team and rightly so. The pharmaceutical industry famously abuses the patent process to keep itself capable of charging monopoly prices for drugs decades after producing them through a process known as “evergreening.” Indeed, pharma has tried to get itself excluded from legal processes designed to insure the quality of protected patents, most notably the Patent Trial and Appeals Board’s (PTAB) Inter Partes Review process. Price and Trump will hopefully rebuke such attempts to play by different rules.
But along with patents, another avenue exists, and one already pursued by a previous Republican administration: namely, the adoption of a carrot and stick approach through leveraging pharma’s reliance on taxpayer-funded programs like Medicare and Medicaid. A good example of this is the 340B drug program, which requires pharmaceutical companies seeking to sell to the Medicaid and Medicare Part B markets to offer drugs at reduced prices to hospitals serving vulnerable communities — specifically, institutions like children’s hospitals, rural hospitals, and safety net hospitals. This program, signed into law by President George H.W. Bush, manages to provide cheaper drugs to the populations most in need of them at precisely zero taxpayer expense, since the funding mechanisms of 340B essentially permit the program to pay for itself. No surprise that pharma — ever anxious to keep its prices high for everyone — has tried relentlessly to weaken the program. Trump and Price would be wise to deny them here, too.
But more than this, Trump and Price could adopt a similar approach to 340B and install similar programs governing pharma’s access to different reservoirs of taxpayer money. Such an approach would be well in line with the President-elect’s previous commitments to tougher negotiations between corporate America and Washington without opening the Pandora’s Box of direct negotiations between pharma and the federal government over drug prices.
What Trump and Price will actually do is anyone’s guess, but in view of Trump’s stated commitments, that they will do something is certain. Those with an interest in a drug market that works for Americans should be prepared to offer these ideas, and others, to them at every turn.