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Executive Summary

Medicare price negotiation is not a new idea – nor is the concept of using the Presidential megaphone to talk down drug prices. Will Trump and Twitter turn it into something bigger?


The immediate reaction in industry to the election day sweep by Republicans (beyond surprise at the unexpected victory of Donald Trump) was a sense of relief: the potential for an all-out battle over drug pricing policy seemingly fell by the wayside. (Also see "Trump Win Is False Security For Drug Makers, Allergan CEO Warns" - Scrip, 1 Dec, 2016.)


Trump’s comments on drug pricing during the transition – first in a Time “Man of the Year” interview published shortly after the Election, then in his first press conference Jan. 11, and again in an interview with the Washington Post published Jan. 16 – underscore the more complicated reality: the populist Republican President isn’t backing down from claims that he will drive down drug costs. (Also see "Trump Makes A Nasty News Day For Pharma – But What Will It Really Mean?" - Pink Sheet, 11 Jan, 2017.)


Simply put, based on his public statements, Trump does not fundamentally differ in his views on drug pricing from his Democratic opponent (Hillary Clinton) – nor from his predecessor in the White House, Barrack Obama.


Like his predecessor, Trump says he favors Medicare price negotiation. Hearing a standard Democratic talking point coming from a Republican President is certainly reason for concern in industry. But it doesn’t change the reality that there is no simple way to implement systemic price negotiation in Medicare, given the structure of the Part D benefit. (See sidebar for related story.)


At the same time, it is also true that there is nothing to stop a suitably motivated Administration from finding ways to drive down prices one product at a time.


When “price negotiation” first became a rallying cry for Democrats, in fact, they cited actions by the GOP Administration under George W. Bush to “negotiate” a lower price for the antibiotic Cipro. That was a unique and complex story, but does illustrate the broader point: the bully pulpit is a powerful tool, one that can work even where laws are vague and uncertain. (Also see "Putting the Bully in the Bully Pulpit: The Democrats' Plan to Cut Drug Prices" - Pink Sheet, 1 Feb, 2007.)


Twitter attacks may be more efficient (and certainly more concise) than a series of Congressional hearings or a national coverage analysis, but many sponsors have learned that the lack of legal mechanisms to set prices does not mean that the federal government can’t intervene in specific cases – as Turing Pharmaceuticals AG, Valeant Pharmaceuticals International Inc. and Mylan NV can attest.


Or, go back further and ask KV Pharma (Makena) or Dendreon Corp. (Provenge) or Idec Pharmaceuticals Corp. (Zevalin). If you can find them.


The fear of Trump using the bully pulpit of the White House to force companies to cut prices is very real. However, unlike so much about the Trump Administration, it isn’t really new. In fact, it is something of an American tradition.


From the editors of The RPM Report.


Read more content on the US election here.



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