Trump tweets up a storm on drug prices but delivers little change
President Donald Trump’s condemnation on Twitter Monday of Merck CEO Kenneth Frazier for what he called “RIPOFF DRUG PRICES” was just his latest rebuke of the drug industry for its soaring prices. But six months into his administration, the president’s rhetoric bears little resemblance to his record.

“His rhetoric is full of fire and fury, but so far the White House has not taken any real action to lower drug prices,” said David Mitchell, president of Patients for Affordable Drugs, which is pushing for policies at the state and federal level to lower drug prices.

To be sure, Trump’s campaign pledges on reducing drug prices had no buy-in from congressional Republicans who would have to pass legislation to enable Medicare to negotiate drug prices. But the president has authority to take certain steps on his own. He doesn’t need congressional approval, for instance, to move forward with drug importation, or to use Medicare to test new ways to pay for drugs. The administration also has broad authority to intervene when the government has invested in drug research but the manufacturer sets a price that puts it out of reach of many Americans.

Absent such concrete steps from his administration, many wrote off Trump’s tweets assailing Frazier as more of a personal feud than a sign Trump was preparing to take any action. While pharma stocks had nosedived in response to Trump’s remarks in January, they scarcely budged after his latest threats — a sign that investors wrote them off.

“We are still waiting for policy proposals from the White House that might match the rhetoric, but no one is holding their breath,” said John Rother, president of the National Coalition on Health Care, which represents more than 80 groups seeking health system reform, and executive director of the Campaign for Sustainable Rx Pricing, a coalition that includes health insurers, businesses like Walmart, physician groups and others pushing for drug pricing changes.

“Sounds like a rant, but not one with any policy intentions. At least for now,” said Ronny Gal, who advises pharmaceutical investors for investment bank Bernstein in New York City.

Most of the steps the White House is considering to tackle drug costs have received underwhelming reviews from those calling for lower prescription pricing and sighs of relief from the powerful pharmaceutical lobby.

A leaked draft of Trump’s executive order on drug prices, obtained by POLITICO earlier this summer, contained few policies that would substantially reduce drug costs.

For example, the draft calls for allowing federal health programs like Medicare and Medicaid to tie payments for drugs to their “value,” as opposed to the volume purchased. The idea is directly promoted by the drug industry and both health policy experts and Wall Street believe it wouldn’t result in lower drug prices.

“We do not see how a drug company would lose in this effort,” wrote David Maris of Wells Fargo in a note to investors about the idea. Drug companies would simply price their products to make up for any losses that might ensue if a product doesn’t work as well as expected in certain patients.

“Odds are that outcomes-based contracts will do little to ameliorate the crushing cost of drugs in the U.S., and may delay reforms that actually link a drug’s price to its benefits,” wrote Anna Kaltenboeck and Peter Bach of Memorial Sloan Kettering’s Center for Health Policy and Outcomes in an op-ed this summer.

The administration effort is led by Joe Grogan, director of health programs for the OMB, who 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 for a course of treatment.

Another adviser with strong pharmaceutical industry ties, Tomas Philipson, was appointed Monday to sit on Trump’s Council of Economic Advisers. Philipson, an economist at the University of Chicago, is also a co-founder of Precision Health Economics, a consultancy serving major drug companies like Gilead, Bristol-Myers Squibb and AbbVie that has been accused of blurring the lines of academia and advocacy for for-profit companies.

Media reports of the administration’s work on an executive order on drug pricing make it appear “that pharma has captured the process,” Mitchell said. “What I have seen does more to help pharma keep prices high than help patients by lowering the prices of drugs.”

The draft executive order also calls for the federal government to come up with ways to reduce out-of-pocket drug spending by consumers. On its face, the proposal may seem to benefit Americans’ pocketbooks, but critics worry this could raise costs to the government and taxpayers. Reductions in out-of-pocket spending don’t force overall price cuts to medicines. It means insurance premiums would likely have to rise to compensate for the lower out-of-pocket costs, while government health care bills would see no benefit.

Beyond the executive order, the Trump team has taken other steps that make people skeptical the administration is serious on drug pricing.

In July, Medicare proposed lowering the rate it reimburses hospitals and clinics that serve many low-income patients for administering costly drugs. Hospitals say this could impact their ability to treat uninsured or poorly insured patients, while drug companies would continue to receive the same amount for the products.

The administration says this policy should lead to a decline in out-of-pocket costs for seniors because Medicare patient co-pays are tied to the government reimbursement rate, but patients on private Medicare Advantage plans wouldn’t see any savings, nor would patients who supplement their Medicare insurance.

Hospitals say this is just another gift to drugmakers, who have been pushing for a rollback of the program that requires drug companies to give steep discounts on medicines to hospitals serving the poor for years. The draft executive order also calls for curtailing this program.

If there is one bright spot in the administration’s efforts on drug pricing, most point to new FDA Commissioner Scott Gottlieb, who has pledged to take several steps to speed cheaper generic drugs to market. He’s also looking at ways to prevent some anti-competitive behavior that brand-name drug companies use to delay competition from generics.

But most of Gottlieb’s ideas deal only with getting cheaper copycat medicines to market after government-mandated monopolies expire. These proposals do little to address the high cost of brand-new medicines — which is where the bulk of drug costs are felt.

Brand-name drugs account for about 12 percent of the medicines sold in the U.S. but about 80 percent or more of the spending on drugs, said Aaron Kesselheim, who studies the costs of medicine at Harvard Medical School.

Democrats who once saw the president as an unusual Republican ally on the topic say they are not hopeful he is willing to fight the drug industry.

“On the campaign trail, he said he was all for it. In the Oval Office, he said he was all for it. Fast forward to today, and he has provided zero relief to Americans struggling to pay for their medicine,” said Rep. Peter Welch (D-Vt.), who chairs the House Democrats’ task force on drug pricing and who met with Trump in March to enlist his support for a bill, H.R. 1776 (115), that he was co-sponsoring with Rep. Elijah Cummings, also a Democrat.