Trump Administration Offers Relief, and Challenges, for Pharma

The surprise election last month of Donald Trump as the next President of the United States, and continued Republican control of the House and Senate, sent shockwaves through Washington and around the world. There were sighs of relief among pharmaceutical executives for the diminished threat of a concerted attack on drug prices and marketing. But action to “repeal and replace” the Affordable Care Act (ACA) and to reduce outlays and oversight of Medicare

Jill Wechsler

and Medicaid, as promised by Trump and Republicans, is not necessarily a plus for industry. Such changes could limit drug coverage and prescribing and boost patient cost-sharing. And that would reignite calls for reining in drug prices from many Trump supporters, particularly those with high-deductible health plans favored by ACA critics.

At the same time, pharma companies stand to gain billions from a Trump tax reform package that eases repatriation of funds held overseas. Less encouraging is the demise of the Trans Pacific Partnership (TPP) trade deal; that may ease pharma concerns about reduced exclusivity for biopharmaceuticals, but also threatens access to ingredients made in China and curbs on overseas sales.

Regulatory retrenchment?

Also unclear is to what extent FDA will be affected by Republican efforts to rein in government regulation that it considers a hindrance to private sector growth. Environmental regulation is a prime target of Trump reformers, as are agencies that oversee financial markets and corporate mergers. The transition website calls for advancing healthcare R&D and making changes at FDA to support the “need of patients for new and innovative medical products,” a vague but unobjectionable statement.

As the new administration addresses federal funding and budget issues, the biomedical research community will get a clearer idea of its support for R&D, along with precision medicine and the cancer moonshot. The $30 billion budget for the National Institutes of Health (NIH), which has shrunk in real terms in recent years, could be cut further as part of new efforts to limit government spending. Trump’s choice for secretary of Health and Human Services will set the tone for selecting a new NIH director and FDA commissioner and signal how much it supports a robust research enterprise that fuels the medical products pipeline.  

Another indicator will be whether the administration grants FDA a “public health” exemption from a promised federal hiring freeze, which is needed for FDA to continue to fill hundreds of vacancies for drug reviewers and other staffers. Trump has backed more expeditious FDA approval of new and generic drugs to promote patient access to important treatments and to provide more competition to high-priced medicines, but continued staff shortages will hinder such efforts.

The Pricing Picture

The need to renew FDA user fee programs for drugs, generics, biosimilars and medical devices before they expire Sept. 30, 2017 provides a ready vehicle for the new administration to advance key provisions in the 21st Century Cures Act. A broad FDA bill also may include measures to combat the nation’s opioid crisis, to facilitate patient requests for early access to experimental medicines and to liberalize manufacturer communications on off-label uses of medical products. The user fee legislation needs to be moving through Congress by June to avoid interrupting FDA’s medical product approval process, but could bog down if policymakers overload it with too many controversial provisions (see sidebar; click to enlarge).

Reforming healthcare

A top priority for Republicans is to repeal and replace Obamacare, but that may be hard to actually accomplish. Trump has called for an end to the individual coverage mandate, to the coverage requirement for larger employers and to fees and taxes levied on insurers and medical products makers. At the same time, the president-elect wants to retain coverage for older children on family plans and to prevent exclusions due to pre-existing conditions, goals not easily achieved without some kind of coverage mandate. Health policy experts on all sides recognize that unless healthier patients stay in the exchanges, insurance costs would “death spiral” out of control. 

Hospitals, insurers and physicians have seen revenues rise under Obamacare and will object to major changes in current coverage and payment policies, such as relying more on health savings accounts to fund healthcare. And many states are skeptical about turning Medicaid into a block grant program championed by Republicans for fear it would reduce federal funding to states. Pharma companies recognize that extending benefits to millions of uninsured individuals has expanded drug use and reimbursement, and don’t want that to disappear.

These challenges may prompt the new administration and Congress to seek more modest ACA reforms initially, possibly through legislation renewing the

Children’s Health Insurance Program (CHIP); it has support on both sides of the aisle and faces a September 2017 reauthorization deadline, similar to FDA user fees. An immediate win for Republicans would be to kill the Medicare innovation center, which has proposed testing new Medicare Part B payment models that pharma opposes. 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, while removing some of the “big brother” requirements most objectionable to free market advocates.

Writing this analysis a few days after the elections, we’re still looking for signs of how Trump will address the many health policy and regulatory issues so important to biomedical innovation and product development and distribution. Curbs on stem cell and genetic research could have a chilling effect, as would support for the anti-vaccine movement. One has to assume that President Trump will strive to implement workable policies and programs that will enhance the nation’s well-being, for all its diverse citizens and interest groups.

Jill Wechsler is Pharmaceutical Executive’s Washington correspondent. She can be reached at jillwechsler7@gmail.com