3 Takeaways for Pharma Orgs from Trump’s ‘American Patients First’ Speech

There was a lot to take in from President Trump’s speech last month about his plans to address the high cost of medicines in America. In general, analysts can’t decide whether the “American Patients First” program will serve U.S. consumers well in the long run, but most agreed that the administration is right in attempting to tackle the complex and important issue of drug prices.

For the industry, the proposals could be cause for concern. But, the prevailing view was that pharma’s biggest fears – such as empowering Medicare to directly negotiate drug prices and allowing Americans to import drugs – were averted.

Here are three takeaways from the speech:

Price vs innovation

President Trump opened the speech by promising, “tougher negotiation, more competition, and much lower prices at the pharmacy counter,” and said that it won’t be very long before the market starts to reflect this new strategy.

Whenever you contemplate measures that will cut into an industry’s profits, however, there’s a need to consider the knock-on effect on innovation. With less incentive to manufacture pioneering products, commercial sense says to spend fewer resources on research and development. This is a particularly dangerous game to play with pharma, as it could mean that companies curb investments in potentially life-changing drugs, such as cures for Alzheimer’s or cystic fibrosis.

On the flip side, cutting the price of drugs will increase access to them; potentially saving or extending the lives of people who have been out-priced in the current market.

As Mark Pauly, Wharton professor of health care management, put it in a discussion on SiriusXM, “Lives will be lost [if new drugs aren’t developed], but lives are also lost by overpriced drugs when people don’t have access to them.”

Related Reading: Drug Repurposing, Rare Diseases and Semantic Analytics

Drugs ads to include price

Another one of the measures being pursued by the administration is to order drug makers to disclose the cost of their medicines in their television advertisements. Speaking after the president, Health Secretary Alex Azar said the Food and Drug Administration would immediately examine requiring that information in TV ads.

The notion that drug commercials should include a price appears to make sense, as it could pressurize drug makers into dropping their prices over fears of a consumer backlash.

In practice, however, it’s unclear which price would need to be advertised, be it the list price that pharmacies would charge, or the discount price that insurers and employers pay. If the requirement is to post the higher sticker price, this could dissuade patients seeking out a necessary drug, notes the New York Times.

Walking the patent tightrope

The pharma industry has become well-known for holding on to patent protection for as long as it can; staving off generic competition so it can continue to charge a premium price for drugs.

However, President Trump has suggested he will come down on those companies who exploit US patent law. But, he acknowledges that there’s a balance to be found between preventing, exploiting and enabling innovation.

“Our patent system will reward innovation, but it will not be used as a shield to protect unfair monopolies,” he said.

This fits with the administration’s plans to allow easier entry for generics, although the president didn’t go into detail on how he plans to negotiate the patent tightrope.

In fact, all the proposals put forward were devoid of detail. The administration will no doubt go about fleshing them out in the coming weeks and months.


Related Reading: FDA Proposed New Knowledge Management System to make Drug Development More Efficient


Author: Ryan Clark

Ryan Clark is a strategic client director working on partnerships between CCC and commercial clients. Ryan has been with CCC over five years and has worked in rightsholder relations and business development prior to joining the strategic client group. Ryan enjoys spending time with his family, and following Bruins hockey and Ireland rugby in his time away from work. 
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