According to the news report by MarketWatch, President Donald Trump’s highly anticipated speech about the price of drugs in the US on Friday allayed concerns that big pharma companies had about his plans for the industry.
The drug industry’s prices slipped prior to the speech, but after Trump spoke, the top drug manufacturers’ share prices rose, as did the drug industry’s exchange traded funds (ETFs). The SPDR S&P Biotech Exchange Traded Fund jumped 1.8%. The SPDR S&P Pharmaceuticals Exchange Traded Fund also rose 2%. The SPDR Health Care Select Sector went up by 0.9% too.
Of the pharma giants, Johnson & Johnson’s stock prices went up 0.9%, Pfizer Inc. gained 1.2%, UnitedHealth Group Inc. stocks rose 1.3% and Merck & Co. Inc. rose by 2.3% by the end of the trading day.
President Trump called his plan American Patients First and said that it was going to have the most sweeping reforms in history. However, his speech concentrated more on rhetoric criticizing the American drug system rather than giving any details about this so called plan.
The few points that he did mention are hardly new, having been raised before by his own administration, including negotiating drug prices for specific government healthcare programs. Trump said the goal of the plan was to reduce the cost of drugs, however, the few points he mentioned would not really help that goal.
According to Time, Trump came up with a list of 50 proposals, however, it is not clear how all these changes would help lower drug prices.
According to Trump’s speech, the American Patients First plan immediate as well as future actions to bring down the price of drugs as well as reduce the out-of-pocket expenditure for patients. He also gave some focus on how his administration was going to improve competition in the market or even change the payment structure for federally run healthcare programs.
Trump did not talk about price negotiations through the Medicare program, despite the fact that it had been one of his selling points when he was campaigning for the Presidency. What he proposed instead was to let Medicare Part D health plans – that cover prescription drugs for older Americans – get significantly more power to hold negotiations with pharma companies.
Another probable change mentioned in the speech was putting an end to the gag rule currently in place for pharmacists. According to this rule, pharmacists cannot tell their customers if there are cheaper alternatives to the drugs they are buying without using their health plan. Pharmaceutical ads will also be expected to list out the cost of their drugs in future.
The speech was vague also in terms of timelines, with no commitments given about when these changes would be in effect – even for the immediate action plans.
The speech was met with disappointment, with Health Care for America, an advocacy group, calling it all talk and no action on the prices of drugs. Co-directors of the group, Margarida Jorge and Ethan Rome said that the only winners were the big pharma companies.
Lloyd Doggett, the Democratic rep from Texas dismissed Trump’s speech as a sugar-coated nothing pill.
While Trump may have complained repeatedly about the extremely high price of drugs during his Presidential campaign, calling the big pharma companies out of control and claiming that they were getting away with murder, he also filled up his administration with ex-industry executives as well as consultants. In fact, one of his main consultants is Azar, who formerly worked at Eli Lily & Co. The head of the drug cost reduction project, Daniel Best, is also an ex-Pfizer executive.