A Look at the Trump Administration’s Pharmaceutical Pricing Policy Proposals

Drug pricing is a critically important issue to America voters. Since Donald Trump’s 2016 campaign promise to replace Obamacare with his own version of an affordable health care act for America, drug prices have continued to soar. 

American voters are angry and their feelings must be palpable as Trump continues to seek public approval by pushing policy and making drug-prices a political-platform in the upcoming 2020 election.

Drug prices are one of the most visible parts of the U.S. health-care system. So it’s top-of-mind.

Trump is fixated on polls and American voters are fixated on drug prices. This threat of public disapproval is prompting Trump into a reactionary pattern as clearly evinced by the timeline of his proposals over the past year and a half.

In July of 2018 drug list-prices increased by 8.4%, and within 4 days Trump had called an Oval Office meeting with Health Secretary Alex Azar to discuss the matter. A few months later in October, the Trump administration fast tracked the release of the proposed ‘International Pricing Index model’, which has been criticized by the Pharmaceutical Research and Manufacturers of America as a counterintuitive measure that could hinder Americans’ access to innovative drug technologies. 

Prices soared again by 6.7% in January 2019. Trump called an Oval Office meeting, and by the end of the month the drug rebate rule was introduced and touted as a plan for transparency within the industry. Yet again, the proposal was met with criticism, and was withdrawn in July 2019. 

Most recently, this past summer drug prices skyrocketed by 14.4%, and with the price increase, the emergence of a clear pattern: within a few days of news of the increase, Trump held another meeting with high-level staffers, and implementation of a favoured nation clause — something the U.S. typically employs in dealings with countries, not companies — was discussed.

This unfolding pattern of a spike in prices followed by a swift reaction indicates that public approval — not industry practices — are what drive Trump’s decisions.

When drug prices jump, so does Trump. 

Anytime Trump sees a story about ‘pharma’ companies raising their prices, he’s going to react. This ‘knee-jerk’ reaction should pose a cautionary-tale to the drug industry. If drug prices continue to climb at the rate they have over the past two years, the concomitant public outcry will continue to spur Trump to action — especially in view of a forthcoming election. And, something is bound to stick. This repeated roll out of proposals at the rate they’ve been released are bound to eventually take hold in the shape of an official policy, most likely by way of increased regulations and restrictions on pricing in the U.S. 

Self-regulation, restraint and a more responsible approach to pricing is needed in the U.S. drug industry, or else repercussions by-way-of Donald Trump may be the consequence.

(Diagram via @BloombergLaw