US president Donald Trump gave a Joint session of the United States Congress address on 28 February, where he called on Republican and Democratic legislators to repeal and replace former president Barack Obama's Affordable Care Act (ACA) or “Obamacare”. The president called the ACA an "imploding disaster", stating that the healthcare law is "collapsing" and in need of decisive action to protect Americans, adding, "Action is not a choice – it is a necessity." Then the President went on to highlight the five key principles that need to be present in new legislation that would replace the ACA (summarised below):
- Americans with pre-existing conditions should continue to have access to coverage, and those citizens currently enrolled in the marketplace should have a "stable transition".
- Tax credits and expanded Health Savings Accounts (HSAs) will serve to help Americans purchase their own insurance.
- State governors should have the "resources and flexibility" to support their Medicaid programmes such that "no one is left out".
- Legal reforms should be implemented to "protect patients and doctors from unnecessary costs that drive up the price of insurance", and work should be done to lower "the artificially high price of drugs and bring them down immediately”.
- Allowing purchase of insurance across State lines that would serve to reduce costs and improve care by fostering a "truly competitive national marketplace".
Principle 4: Bringing down the “artificially high price of drugs” immediately
While at first glance the five principles outlined by Trump seem largely in line with previous bills and proposals brought forth by Republican legislators, a closer look at Principle 4 reveals a hidden warning to Pharma. First it is interesting to note that the fourth principle refers to two unrelated points. The first sounds like medical malpractice reform, and the second reiterates the president’s previous promise to bring down drug prices in the US. This, as confirmed by Press Secretary Sean Spicer previously, will potentially be carried out by allowing Medicare to negotiate drug prices, a highly controversial proposal that is likely to be met with resistance, particularly from Republicans in Congress. Separately, during his address, the President also highlighted the need to bring new medical advances to market quickly, and noted that if the "slow and burdensome approval process at the Food and Drug Administration" is significantly reduced, far more breakthrough treatments and rare disease drugs can reach those in need.
New Republican Healthcare Plan
Pressure is certainly building on President Trump and the Republican leaders to introduce a plan to repeal and replace the ACA. Although Democrats continue to strongly advocate for plans to fix various issues with ACA rather than repeal and replace the law, Republicans are set on starting anew. We still don’t have a replacement plan introduced in Congress, but based on the President’s latest remarks the new plan could carry some surprises for Pharma. Under the new administration, pharmaceutical firms could benefit from deregulation initiatives that could potentially speed up drug approvals as well as taxation relief under the new Republican healthcare reform plan. However, they may also be facing a bigger threat with regards to drug pricing if President Trump continues to support price control despite the opposition of most Republicans as well as the Secretary of Health and Human Services (HHS) Tom Price.
Could Trump keep his promise and endorse drug pricing legislation?
Independent Senator Bernie Sanders of Vermont has called on president Trump to keep his campaign promise and support a bill to facilitate importation of cheaper drugs from Canada and other OECD countries to address the problem of “skyrocketing drug prices”. Meanwhile, president Trump is expected to meet with Democratic House Representative of Maryland Elijah Cummings, an avid Pharma critic, to discuss escalating drug prices next week. Sanders and Cummings have sent numerous letters to CEOs of pharmaceutical companies inquiring about their pricing strategy for particular drugs, and in some cases have called on Congress, the Federal Trade Commission, and the Department of Justice to investigate certain alleged "anti-competitive" or "monopolistic" practices by the industry. They are now working on legislation that would give the HHS authority to negotiate drug prices for Medicare. Would the President endorse this bill? It’s not very likely, but if there is one thing this election has taught us: nothing can be completely ruled out.
Margaret Labban is a Life Sciences Analyst for IHS Markit
Posted 6 March 2017