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February 1, 2017

Trump, pharma execs discuss possible industry changes

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    President Trump in a meeting with executives from top pharmaceutical companies on Tuesday said his administration wants to lower drug prices, reduce regulatory hurdles in the industry, and increase prescription drug production in the United States.

    Meeting attendees included executives from:

    • Amgen;
    • Celgene;
    • Eli Lilly;
    • Johnson & Johnson;
    • Merck;
    • Novartis; and
    • Pharmaceutical Research and Manufacturers of America (PhRMA).

    According to Modern Healthcare, Trump did not offer specific policy suggestions during the meeting.

    Trump's comments on Rx drug prices

    Most of the meeting occurred behind closed doors. However, the Washington Post's "Wonkblog" reports that Trump, who has criticized drugmakers for high prescription drug prices, had a less combative tone during public portions of the meeting.

    Still, Trump maintained his stance that prescription drug prices are too high. He said, "The U.S. drug companies have produced extraordinary results for our country, but the pricing has been astronomical." He added, "We have to get prices down for a lot of reasons." In particular, Trump said, "We have to get the prices way down" for Medicare and Medicaid.

    Trump said his administration via its trade policies could place pressure on other countries to pay higher prices for prescription drugs manufactured in the United States. He said, "Right now, it's very unfair what other countries are doing to us."

    In addition, Trump suggested increasing competition and encouraging "bidding wars" as ways to lower prescription drug prices. However, he appeared to roll back his earlier support for allowing Medicare to negotiate drug prices, Modern Healthcare reports.

    "I'll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market," Trump said. He continued, "That includes price-fixing by the biggest dog in the market, Medicare, which is what's happening."

    In response, Sen. Chris Van Hollen (D) said in a statement that Trump had backtracked on his pledge to curb drug prices. But hours later, White House press secretary Sean Spicer said Trump's policy hadn't changed. The president still believes in getting "the best deal for the government," including using Medicare's market power, Spicer said.

    Trump's comments on industry regulation

    Trump also said he planned to ease FDA regulations in an effort to make the drug approval process faster, stating that the process can sometimes take years and cost companies millions of dollars to get their products approved.

    Health agencies, VA hit by Trump's federal hiring, regulation freezes

    Trump told the executives that his administration wants to "chang[e] a lot of the rules" and "streamlin[e] the process, so that, from your standpoint, when you have a drug, you can actually get it approved if it works, instead of waiting for many, many years."

    Trump also said he was close to nominating a candidate to lead FDA. He said the new FDA commissioner would shape the agency so that drugmakers get their "products either approved or not approved ... [through] a quick process."

    Trump's comments on US drug production

    In addition, Trump said drugmakers "have to" bring manufacturing back into the United States, adding that his administration would help the companies by reducing regulation.

    According to the Wall Street Journal, several U.S. drugmakers are in the process of building facilities overseas or recently have done so. Some of those efforts are meant to meet drugmakers' demands in other countries, not to increase imports to the United States, the Journal reports.

    During the meeting, pharmaceutical executives told Trump that tax reform would help their efforts to create jobs and increase production in the United States. Trump assured the executives that such reforms would occur.

    Pharmaceutical executives' comments

    Merck CEO Kenneth Frazier said the meeting was "very constructive," adding that Trump is "very much focused" on increasing patients' choices.

    Similarly, PhRMA President and CEO Stephen Ubl in a statement called the meeting "positive." He added, "The current system needs to evolve to enable the private sector to lead the move to a value-driven health care system. To do this, we need to reform existing laws and regulations that are currently preventing private companies from negotiating better deals and paying for medicines based on the value they provide to patients and our health care system."

    In addition, many attendees emphasized their companies' efforts to increase their presence in the United States, the New York Times reports.

    For example, Joseph Jimenez—CEO of Novartis, which is based in Switzerland—said the company's research and development headquarters is located in Massachusetts. He added that the company employs about 20,000 people in the United States.

    Rep. says GOP will focus on high drug prices

    House Energy and Commerce Committee Chair Greg Walden (R-Ore.), who attended the meeting, said addressing prescription drug prices will be "high on [the GOP's] agenda."

    "I can tell you, having been party to it, [Trump] had a pretty serious conversation with the CEOs of the major drug companies," Walden said, adding that Trump "was pretty insistent the prices are too high, they've got to come down, [and] we've got to tackle this problem together."

    Industry observers react

    According to the Times, some patient safety advocates criticized Trump's proposal to scale back FDA policies, which they argued could ease safety requirements for products the agency regulates.

    Michael Carome, director of Public Citizen's health research group, said, "Trump's horrifying proposal reflects utter ignorance about [FDA's] essential role in protecting public health and once again demonstrates his commitment to placing corporate profits above protecting the safety of the American people."

    Diana Zuckerman, president of the National Center for Health Research, expressed similar concerns, saying, "Streamlining drug approvals sounds good, but the agency has already weakened approval standards and patients are paying the price—hugely expensive drugs that don't even work."

    Other observes questioned whether increasing U.S. manufacturing of prescription drugs could ultimately decrease drug prices. Jeff Weisel, a director at Ernst & Young's health care practice, said more stringent regulations on overseas manufacturing could "cause great disruption to the health care system in the U.S. and directly drive up costs."

    John Taylor, a former FDA official and pharmaceutical executive who now advises the industry on compliance and regulatory affairs, said the industry should "pay attention to" Trump's manufacturing proposals "in light of [their] potential impact on the cost of manufacturing."

    (Rubenfire, Modern Healthcare, 1/31; Johnson, "Wonkblog," Washington Post, 1/31; Thomas, New York Times, 1/31; Loftus/Rana, Wall Street Journal, 1/31; Paletta et al., Wall Street Journal, 1/31; Slack, USA Today, 1/31; Sullivan [1], The Hill, 1/31; Sullivan [2], The Hill, 1/31).

    12 things CEOs need to know in 2017

    12 things CEOs need to know in 2017

    The continued growth of the consumer-driven health care market threatens the durability of patient-provider relationships—and, at the same time, the push toward population health management and risk-based payment is greater than ever.

    Hospitals and health systems must adopt a two-pronged strategy to respond to these pressures and serve both public payers and the private sector.

    At the core of that strategy? A formula of accessible, reliable, and affordable care that wins consumer preferences and drives loyalty over time. Below, we share 12 key insights for senior executives working to create a consumer-focused health system.

    Download the research brief

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