The biggest near-term risk to industry from a Trump presidency appears to be uncertainty created by efforts to repeal and replace the Affordable Care Act, underscored by the fact that Congressional Republicans are debating whether the undertaking should be legislation that repeals and replaces.
The Affordable Care Act (ACA) brought health insurance to tens of millions of Americans, expanding the number of customers for pharmaceutical companies. If repeal and replace results in a lot fewer people with coverage, that could mean a lot less medication dispensed. And while industry is aware of the risks of government involvement in healthcare purchasing – and is certainly no fan of the fees that helped fund the coverage expansion – strengthening the relative hand of insurance companies to set coverage policies, as many replace proposals would do, is not something sponsors want to see either.
It’s still too early to see how the health insurance reform debate will play out, but it seems safe to say that the exchanges will have been eliminated in one fashion or another by the mid-term elections. What rises in their place – and what Medicaid will eventually look like – remains hard to say, which means companies will be forced to manage their pipelines and price their products without a clear sense of who their customers are going to be and how they will pay for their prescriptions.
Changes At FDA
In the face of all that uncertainly emanating from Capitol Hill and CMS, FDA could end up being seen as a bastion of calm predictability by comparison. Sponsors may not always like what they hear, but the applications move smoothly through. True, the agency is well off last year’s record-setting pace for approvals, but the numerous complete responses letters and other submission dynamics could be setting up a blockbuster 2017.
FDA will of course change in many ways during the Trump administration. Indeed, the sixth iteration of the user fee agreement, if enacted as planned, is already poised to push the agency towards greater use of patient-reported data and post-market evidence. And the 21st Century Cures legislation moving through Congress will give sponsors more flexibility on biomarkers and clinical trial design. (Also see "The Evolution Of 21st Century Cures Legislation" - Pink Sheet, 29 Nov, 2016.)
On top of that will be all the changes that Trump appointees will make. For example, FDA has been uncomfortable, to put it mildly, with the idea of allowing sponsors more latitude on off-label communications. One can expect that attitude to change quickly in the new administration, and if regulation and guidance aren’t immediately forthcoming, sponsors themselves will probably still feel like the line has shifted even without a formal declaration.
But the downside of changes like that, and even just an increase in the rhetoric calling for FDA reform, is that the agency staff itself may begin to feel disheartened. Time spent on internal policy fights is time that can’t be spent advising sponsors, and a staff being constantly told it needs to change its approach may in fact not be able to maintain the currently strong review pace, especially if employees become disillusioned and leave.
The Signature Issues
Those are the kind of risks and benefits that industry would be facing under any Republican president. Where companies may face special risks are around Trump’s signature issues of immigration and trade. The pharma industry relies on both, and the incoming president has expressed, shall we say, some deep skepticism about them. Undocumented workers aren’t key to pharma’s business planning, but many of the proposals being developed by the administration would even eliminate visas for highly skilled workers, meaning that companies might not be able to recruit, or even just relocate, executives and scientists as needed.
On trade, pharma long ago transitioned much of its product manufacturing oversees, and any successful effort by Trump to Bring Jobs Back through tariffs would be incredibly disruptive. It’s uncertain how much Trump could even accomplish on that front, though, given that his position is an outlier within the Republican party, and building bridges to anti-trade Democrats might make accomplishing other parts of his agenda more complicated.
When it comes to the status of jobs in the US at risk of moving overseas, pharma should pay careful attention to the situation with the Carrier factory in Indiana. The company had earlier announced plans to relocate production to Mexico, and the decision had been a focus of Trump’s campaign. He’s going to be president now, and the company has changed its mind. It’s unclear what motivated the switch – financial or regulatory concessions from the state, perhaps, or potentially a decision by the defense-contracting parent company to encourage good relations with the incoming head of state. The terms of the arrangement will probably become clear eventually.
Does that mean that pharma firms contemplating moving research or production overseas, as many have done over the years, should try to cut a deal with Trump to keep the jobs in the states? If it would allow the administration the opportunity for a good public relations moment, it could be worth a try.
But any firms undertaking that strategy should realize they are playing with bright, orange fire. For firms that don’t get too close to the flame, however, its basic Republican glow and the fundamentally solid economy the new president will inherit likely means that industry is looking at a great four years.
This article is part of Scrip 100's Futurology chapter. For other articles in this chapter please see:
- Brexit: What Can The Life Sciences Industry Do About It?
- Therapeutic Progress Amid Political Turbulence: Could 2017 Be Pharma's Year?