Pharmaceutical Manufacturers Gear Up for Political Change

The election last month of Donald Trump as the next President of the United States, and continued Republican control of the House and Senate, will lead to new approaches for providing healthcare for Americans, including coverage and support for prescription drugs. Trump and Congressional leaders pledged to revise the Affordable Care Act (ACA), and that remains a top priority for the new regime. Republicans also will seek changes in Medicare and Medicaid operations to reduce federal oversight and spending, which also could affect drug utilization. Although Republicans generally oppose industry price controls, initiatives to curb rising outlays for prescription drugs may be an area where the Trump administration finds common ground with Democrats.

Action on all policy issues, however, will be on hold while the new president appoints and seeks Senate confirmation for Cabinet secretaries and hundreds of federal officials. This includes a new head of the Department of Health and Human Services (HHS) and new leaders for FDA, the National Institutes of Health (NIH), and other key health agencies. It also will take several weeks for the new Congress to organize its leadership and committees. The House Energy & Commerce committee and its health subcommittee will have new chairs due to tenure limits and retirements. 
 

Changes at FDA 

Republican interest in limiting federal regulation in favor of market-based strategies may influence the Trump administration’s choice of a new FDA commissioner. The White House will seek a candidate who promotes patient preferences and risk-benefit considerations in approving important new medicines and in monitoring drug manufacturing and testing. Trump has cited the need for more expeditious FDA approval of new generic drugs to provide more competition to high-priced medicines, and this will remain a priority for assuring patient access to treatment, especially to drugs in shortage due to limited demand or high production costs. 

Another priority for FDA is to address the nation’s opioid crisis. Trump pledged to crack down on prescription drug abuse and wants faster approval of new abuse-deterrent pain killers. Republicans also will press FDA to facilitate patient requests for early access to experimental medicines and to liberalize manufacturer communications on off-label uses of medical products.

Initiatives related to these and other FDA programs may be included in must-pass legislation to renew FDA user fee programs, which expire Sept. 30, 2017. Congress is under pressure to quickly approve measures reauthorizing the Prescription Drug User Fee Action (PDUFA VI) and other fee programs for biosimilars, generic drugs, and medical devices. These programs have strong support from manufacturers, but legislation needs to be moving through Congress by June to avoid interrupting the medical product approval process. 

This tight schedule sets the stage for overloading user fee legislation with multiple provisions, including initiatives to streamline FDA policies. There also may be drug price control measures, such as permitting importation of certain high-priced drugs, which Trump has supported, along with authority to negotiate Medicare rates for certain pricey therapies. It’s not clear how such negotiations would occur, as Medicare would have difficulty pressing manufacturers for lower prices without being able to deny coverage for a specific medicine, as is common with commercial plans. Medicare drug plans, moreover, are required by law to cover certain classes of drugs, a policy backed by pharma companies, which are anxious to maintain the nearly $150 billion in Medicare spending on prescription drugs under the current system. 

Other popular reforms would constrain the ability of manufacturers to raise prices within certain time frames, such as a year, possibly by boosting Medicaid rebates on products that increase prices faster than inflation. And there are proposals to provide greater transparency in the process for setting drug prices, rebates, and patient copays, as well as measures requiring greater disclosure of the role of pharmacy benefit managers in setting rebates and discounts that influence prices and patient outlays. 
Too onerous price restrictions, however, would draw industry opposition, which can be powerful, as seen in pharma’s success in quashing California’s controversial Proposition 61 ballot measure. That proposition aimed to link payments for drugs covered by California’s Medicaid and other state employee programs to those available to the Veterans Administration health program. Drug manufacturers assembled a $100-million “war chest” that financed a campaign to convince Californians that the measure would only boost outlays for medicines, a stance supported by veterans’ groups fearing higher drug bills. A number of states have proposed drug price transparency laws that require pharmaceutical companies to report outlays for research and development, marketing and advertising, but these may fall off the agenda in the face of stiff industry opposition. 

Replacing ACA

As with FDA user fees, the Children’s Health Insurance Program (CHIP), which has support on both sides of the aisle, faces a September 2017 reauthorization deadline. That sets the stage for a CHIP bill to carry some Obamacare revisions, but not likely major reforms. Initial changes could limit the individual coverage mandate, lift the coverage requirement for larger employers, and cut fees and taxes levied on insurers and medical products makers. Pharma companies also will back efforts to curb the Medicare innovation arm that has proposed testing new Medicare Part B payment models.

But broader ACA reforms will take more time. Hospitals, insurers, and physicians will object to repeal-and-replace proposals that rely more on health savings accounts to fund healthcare coverage. And many states are skeptical about turning Medicaid into a block grant program championed by Republicans for fear it would reduce federal government funding to states. The challenge for Trump and Congressional leaders is to maintain access to healthcare for the millions of Americans who have gained coverage under the ACA. Pharma companies back such efforts, as expanded healthcare coverage facilitates drug prescribing and utilization by both public and private health programs.

As the new administration addresses federal funding and budget issues, the medical community will get a clearer idea of its support for biomedical research at NIH, along with the Obama administration’s Precision Medicine Institute and cancer moonshot. Trump also will be busy shaping a promised tax reform and changes in trade policy, two highly contentious issues at the top of the White House agenda. Manufacturers support corporate tax changes, particularly provisions to facilitate repatriation of foreign taxes. But they may oppose Trump initiatives to reduce imports from China and other nations, which could affect industry access to foreign-made pharmaceutical ingredients and to overseas markets.

Article Details

BioPharm International
Vol. 29, No. 12
Pages: 8-9

Citation

When referring to this article, please cite it as J. Wechsler, "Pharmaceutical Manufacturers Gear Up for Political Change," BioPharm International 29 (12) December 2016.