President Donald Trump on Thursday again pledged to quickly lower drug prices in the U.S. Stickers will “soon be lowered massively,” Trump tweeted Thursday, indirectly touting a group of executive orders he signed last Friday.
But though Big Pharma CEOs called out their concerns with the plans during this week’s analyst calls—especially Trump’s effort to tie U.S. prices to lower stickers abroad—they also doubted that the moves could be implemented this year.
The president’s drug pricing executive orders center on creating discounts for insulin and epinephrine, eliminating rebates, allowing drug imports from Canada and other countries and creating an index linking U.S. prices to those elsewhere. Trump also gave the industry a month to propose an alternate system to the international pricing index (IPI).
Drug prices will soon be lowered massively. Big Pharma (Drug Companies) are advertising against me like crazy because lower prices mean less profit. When you watch a Fake Ad, just think lower drug prices!!!
— Donald J. Trump (@realDonaldTrump) July 30, 2020
While the White House hasn’t yet released full details, CEOs for Pfizer, Sanofi, GlaxoSmithKline and Eli Lilly responded on conference calls this week. Pfizer’s Albert Bourla said the orders “pose enormous distraction” to the biopharma industry as it fights COVID-19. Pfizer would reconsider U.S. expansions or possibly cut jobs if the measures are implemented, he said.
Sanofi CEO Paul Hudson said he’s “not expecting any impact from these conversations this year” and that the IPI is a “very convenient subject matter” right before the election. The IPI is a “blunt instrument” that doesn’t use a “truthful comparison” of differences between various healthcare systems, including innovation and access.
GlaxoSmithKline CEO Emma Walmsley also criticized the IPI, saying “global systems are not comparable” and that the “focus should be on maintaining safety and quality of products and also incentivizing innovation.”
Eli Lilly CEO David Ricks said the IPI and reimportation pose “serious negative consequences” for patient safety and the supply chain. They “at best distract, at worst cripple” the industry that’s working to deliver treatments and vaccines for COVID-19, he said.
Legal questions remain, as well. If the administration proposes using the Center for Medicare & Medicaid Innovation, a small agency that drafts healthcare pilot programs, to regulate the U.S. drug market, industry would “vigorously” challenge that authority, Ricks said. Overall, the “probable planning scenario” is that the orders won’t bring major changes this year, Ricks said.
The CEOs weren’t entirely negative on the president’s orders. They voiced support, predictably enough, for the proposal to eliminate rebates, which revives a prior administration push to crack down on pharma payments to middlemen. The pharmacy benefits management industry fought the idea before, and the Trump administration abandoned it after a negative review from the Congressional Budget Office. It’s unclear how the administration plans to avoid a CBO thumbs down this time.
Several analysts also believe Trump’s executive orders won’t bring much change—at least not right away. RBC Capital Markets analyst Randall Stanicky wrote to clients that his team sees “little impact” from Friday’s announcement.
In a separate note, Piper Sandler analyst Christopher Raymond wrote that while “the announcement may have taken some investors by surprise, none of these ideas put forth are new, or in fact any more implementable than before, especially without congressional action.”
The president’s pledges to tackle high drug prices started back before the 2016 election, and, soon after he was elected, Trump said drug companies were “getting away with murder” and that he’d push for more competition. But the administration has failed to bring about major changes for various reasons. Instead, increased attention to the issue has prompted drugmakers to rein in their own list-price increases, and net prices actually declined in the first quarter of 2020, according to an analysis.