Politico: Trump order on drug prices may not match criticisms of pharma

Trump administration officials will huddle Friday as part of a push to issue an executive order addressing rising drug prices, but few are expecting its punch to match the president's often blistering rhetoric about the pharmaceutical industry.

President Donald Trump made drug costs a prominent issue during his campaign and beefed up his criticisms after the election, saying in January that the industry was "getting away with murder."

Six months later, the industry isn't thrilled about the contemplated administration action — but it's no longer in a state of panic. A primary reason: Expectations are that the White House won't endorse tactics pharma fears most, such as major changes to drug payments in Medicare parts B or D, or allowing broad importation of medicines from countries where they typically sell for less.

"Our industry sources indicate that pharma expects it has successfully shifted the dialogue from the high price of innovation to transparency and other parts of the supply chain. As such, several drug company executives have expressed the belief that Trump's drug price approach will not include drug reimportation and Medicare negotiation of drug prices," Wells Fargo analyst David Maris wrote in a note to investors Thursday evening.

Sources within the administration said the players along the health supply chain that could be hit hardest will be the pharmacy benefits managers, who administer drug benefits for employers and health plans.

The industry's confidence is derived from the presence of key allies in the White House. Joe Grogan, OMB's director of health programs, is working on the executive order, according to multiple sources inside and outside of the government. Grogan spent the last five years as the head of federal affairs for Gilead Sciences — the drug company that helped ignite the drug pricing debate in 2013, when it set the price of a new hepatitis C treatment at more than $80,000.

Grogan does not have a White House ethics waiver, meaning that under a policy implemented in January, he is supposed to recuse himself from issues he lobbied on in recent years.

He's not the only administration official who doesn't see eye-to-eye with Trump on drug pricing. HHS Secretary Tom Price, for example, was part of the congressional effort to kill the Obama administration's last-ditch attempt to tackle drug pricing last year through a Medicare Part B demonstration project.

A draft of the executive order has been circulating around the White House and HHS, but it is a work in progress and there's disagreement among White House officials over how to proceed.

A White House spokesperson said Friday's meeting is "part of the ongoing discussions to reduce the burden of the high cost of drug prescriptions and unleash a wave of innovation to develop cures and treatments for patients."

One side within the administration includes Grogan and like-minded individuals who are more in tune with the drug industry point of view. Others have held more of a grudge against pharma — which didn't support Trump during his campaign — and are less inclined to protect the industry.

Attending the meeting will be Price, CMS Administrator Seema Verma and FDA Commissioner Scott Gottlieb.

Chief economic advisor Gary Cohn, assistant to the president Reed Cordish, and representatives from the Health Resources and Services Administration — which administers the 340B Drug Discount Program — and the Office of the U.S. Trade Representative are also expected to attend the meeting.

There's a sense among some that the White House may decide to do a "check-the-box" type of exercise, issuing an order that calls for various parts of the government like FDA, CMS and HRSA to work on drug pricing measures. That would demonstrate a commitment to the issue while more nuanced policies are being crafted.

If the order goes into more specifics, most expect it will include a directive for the government to allow more value-based drug pricing arrangements — agreements between insurers and manufacturers that tie payment for a drug to how well it works.

It's an idea long promoted by the drug industry itself.

Also expected are reforms to 340B, but given the program's large expansion under the Affordable Care Act, policy experts say there are few things Trump could do to expand the program.

The other possibility is that the administration will address the oft-voiced criticism that hospitals and clinics that benefit from low 340B prices don't pass on the discounts to patients. This could resonate with consumers but wouldn't upset the industry. Trump is close to Rep. Chris Collins (R-N.Y.), who has drafted legislation on the issue that could be adapted.

The pharma trade policies the administration is looking at are also expected to be relatively industry-friendly, including taking steps to reward U.S. manufacturing or making a stronger effort to go after countries that violate intellectual property protections on drug pricing.

Also said to be under consideration are proposals that would grant more monopoly power for innovative medicines or allow companies more flexibly to amend drug patents.

The administration is also said to be looking at changes to fees that pharmacy benefits managers impose on pharmacies.

Some congressional Democrats are preparing for an industry-friendly package, based on accounts from allies outside the government who are working on drug pricing and have not been consulted on the order.

"Another broken Trump promise seems to be in the making, with Medicare negotiation abandoned in favor of Big Pharma's wish list," Rep. Lloyd Doggett (D-Texas), who co-chairs the Prescription Drug Task Force, told POLITICO. "In January, two weeks after declaring that drugmakers were 'getting away with murder,' Trump was cozying up to pharmaceutical executives at the White House. He should be using executive power now to bring down prices, not to promote more restrictive government-approved monopolies upon which Big Pharma relies."

Even if the Trump team wanted to mount an all-out assault on pharma, there are limits to what they could accomplish without congressional support. That's particularly true when it comes to Medicare and Medicaid — and there few signs Republicans in Congress want to take any major action against the industry.

But sources say Trump could still make some bold moves. For example, he could make tweaks to the number of protected classes in Medicare Part D, giving insurance companies more leverage to deny coverage for certain medicines and bring down pricing.

He could also use the authority of Medicare's Innovation Center to test out new methods to pay for drugs, including the "government bidding" idea he has floated for Medicare Part B.