The surprise victory of Donald Trump and Republicans in the Senate lifted pharma stocks as fears over what a Hillary Clinton administration might do on drug prices waned and the prospect of new tax advantages suddenly appeared on the horizon. The industry also scored big in beating back the much-watched California ballot measure to cap prices on drugs for some state health programs.
NO NEW POLICY
It appears that Trump’s sights are set on repealing (or “amending“) Obamacare – not tangling with drug makers. The latest refresh of his health care policy web page includes no mention of the Medicare negotiations he occasionally talked about on the trail. In fact, it doesn’t mention drug costs at all, but it does pledge reform of the FDA “to put greater focus on the needs of patients for new and innovative medical products.”
21ST CENTURY CURES
And there’s a must-pass vehicle coming next year for just that: the user fee reauthorization, which is also now seen as the likely home for many of the policies baked into 21st Century Cures.
The NASDAQ Biotechnology Index has shot up about 10 percent since the election. Analysts note other benefits to the broader medical products sector, such as the two-year delay of the medical device tax through 2017, which is now likely to become permanent as part of the Obamacare repeal effort.
Recent polls show it’s still the top health care priority for voters. Pharma lobbyists see the likely policy response as much less threatening, especially in D.C., but they don’t expect the issue to vanish. “It’s going to continue to be a work stream on the Hill, but we’re not going to create an independent review board [on drug pricing], we’re not going to give [the Institute for Clinical and Economic Review] super powers,” a veteran GOP lobbyist, who spoke on the condition of anonymity. “All of those things that were going to be new and extremely aggressive aren’t going to happen.”
Ian Spatz, former top lobbyist at Merck and now a drug industry consultant at Manatt, Phelps & Phillips, LLP, said the industry’s initial reaction to the election was “shock and surprise” and “caused everyone to go back to the drawing board and figure out what the strategy is.”
Drug costs are “an important pocketbook issue for voters” and it’s not going away, he said. He expects states will likely be the “focus of action.”