Trump pledges new HHS Secretary Azar will get drug prices ‘way down.’ Why aren’t pharma investors scared?

  • July 28, 2018

Apparently not.  In January 2018, at the swearing-in ceremony for new HHS Secretary Alex Azar, Trump said Azar would bring drug prices “way down.”  However, this time, despite the familiar words, the President’s comments did not touch off nearly the same reaction on Wall Street, signaling that industry and investors may be more skeptical about the threat of pricing reform.  “We have to get the prices of prescription drugs way down and unravel the tangled web of special interests that are driving prices up for medicine and for really hurting patients,” Trump said at the ceremony, according to the White House.  Trump added that other countries “pay a fraction for the exact same drug.”

“The exact same pill, in an identical box from the same factory, costs us much more — many times more than it does in other countries,” he said.  “And nobody knows that process better than Alex.”

Those are typical talking points from the President, who has occasionally blasted pharmaceutical companies during his campaign and in office.  However, after a year in charge, most of the Administration’s progress on the issue has been at the FDA, where new commissioner Scott Gottlieb is pushing to boost generic approvals and lower prices by tackling the “gaming” that companies use to extend monopolies.  No major drug pricing proposals have gained steam in Congress.

Azar won the HHS Secretary nomination after a travel scandal engulfed former secretary Tom Price.  President of Eli Lilly’s U.S. subsidiary until last year, Azar also has experience as a Deputy Secretary at the Agency.

During his Senate confirmation hearing, Azar said tackling drug costs would be his top priority.  He said more competition could lower prices and echoed Gottlieb’s point that branded drug manufacturers routinely “game the system” to protect their exclusivity.

At the hearing, Sen. Ron Wyden, D-Ore., asked Azar whether he ever lowered the price of a Lilly drug during his time there.  Azar responded that prices are “too high” and that he was unsure if the price of a branded drug at any company had ever been lowered.  “Every incentive in this system is toward higher prices,” he told the Senator.

Pharma investors fear pricing reform less than they did a year ago in January, and at least one Big Pharma CEO agrees.  After a multiyear firestorm over the industry’s pricing practices, Merck & Co. chief Ken Frazier said early in January that he doesn’t expect “any kind of significant jump” in pressure from public agencies or private payers in 2018.

Eli Lilly CEO David Ricks offered up a different perspective.  Days later, he said pharma needs to act now, partly because there are people in government who “understand that tricky balance, that fragile balance between reward for innovation and access,” he said. T he industry could work with those people to help make drugs more affordable for patients, he said.  Both executives were addressing audiences at the J.P. Morgan Healthcare Conference.

If pharma doesn’t do more to address affordability concerns, “people will do things for us,” Ricks said at the meeting.

During Trump’s first year in office, pharma’s U.S. lobby group boosted its lobby spending by 30%, according to disclosures, working on a range of issues including Medicare price negotiations, patent protections, importation of medication and more.  The group spent the most during the first quarter, when Trump made his original statement about the industry “getting away with murder.”

REFERENCE:  Fierce Pharma; 30 JAN 2018; Eric Sagonowsky

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