Trump Administration Officials Huddle at White House to Discuss Drug Pricing

A White House spokesman confirmed to Focus that a meeting took place at the White House on Friday "as 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."

The confirmation follows reports from several media outlets citing sources who say the meeting, with US Food and Drug Administration Commissioner Scott Gottlieb among other officials in attendance, likely discussed a potential executive order (or even two) on drug pricing. A White House spokesman said he could not comment on any executive orders in development and that there would not be a press release on Friday’s meeting.

Possibilities

Speculation on what such an order might include indicates a likely limited impact on the pharmaceutical industry, particularly as a recent Senate hearing this week on the issue dovetailed into a discussion on the Republicans' plans for repealing and replacing the Affordable Care Act.

Bernstein analyst Ronny Gal said in an investor note that he expects "broad statements," incorporating some action already ongoing, such as giving states more power and approving generic drugs more quickly, in addition to other policy proposals, some of which might be eventually implemented.

The use of more value-based drug pricing contracts has been floated recently as a possible way to combat rising prices.

But World Health Organization officials have already voiced opposition, and Gal wrote: "To the extent value-based-pricing is adopted as the main way to address drug costs, the industry will likely be in the clear on the drug issue for roughly a decade.

"While the argument in principle is logical (drugs should be priced to the value they provide), it turns every debate on drug costs into a convoluted economic calculation and the drug industry has so far ran circles around payers in developing economic models for the value of drugs they provide," Gal said.

Another possibility, following a new Maryland law going after price gouging generic drugs, would be for the government to restrict certain drug prices or increase Medicaid rebates from the current 23%.

"This will be an easy policy option for legislators to justify and is easy to implement," Gal said. "This would hurt the drug industry modestly, but likely is an acceptable limitation."

Direct government negotiation of drug prices, however, according to Gal, seems "highly unlikely, but if it happens, it will be major negative for pharma. Similar point can be made about reference drug pricing or direct importations, both of which will be major negatives for the drug industry, but are not expected."

Democrats, including Sen. Bernie Sanders (D-VT), have been pushing for such imports from Canada.

Meanwhile, narrowing the scope of the federal 340B Drug Discount program, which requires manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at significantly reduced prices, would be "a clear positive for industry," Gal added. He noted that as pharmaceutical companies make less profit in this market, and it now accounts for up to 2%-4% of the total drug market, "To the extent this program is narrowed (e.g. only to Medicaid/uninsured patients or only the locations of the hospitals which have disproportional share), it would materially financially benefit the drug industry."