Analysis: White House Takes Bully Pulpit Approach On Drug Pricing Reform, Congress Unlikely To Act

President Donald Trump is keeping pharmaceutical execs, lobbyists and investors on their toes.

But very few of the president’s tactics — not even Wednesday’s unexpected, offhand remark portending “voluntary massive drops in prices” in two weeks — surprise Height Capital Markets.

“[The notice] is consistent with his administration's ‘bully pulpit’ strategy of cajoling the drug makers into industry-led changes to drug pricing,” Height analyst Andrea Harris said in a note. “ ... The announcement is the most extreme form of bullying we have seen yet; the president effectively said: ‘we can do this the easy way, or we can do this the hard way.’”

What The Strategy Means For Companies

Trump has given drugmakers the choice to cut market prices or suffer public censure.

Height expects even companies that recently reported price drops will be pressured to make new announcements, with the consequence of noncooperation being tougher industrywide regulation.

“This pits drug company against drug company to avoid the president's crosshairs, and it discourages them from holding together and facing the drug pricing policy debate as a unified industry." 

Where The Executive, Legislative Strategies Align

Harris predicts the announced cuts Trump alluded to will follow HHS Secretary Alex Azar’s June 12 testimony before the Senate Health, Education, Labor and Pension Committee, during which senators are expected to orally protest high drug prices but take no action to advance legislative proposals.

In fact, Height anticipates no drug pricing legislation will come this year, although discussions will continue around pharmacist “gag clauses” and abuses of the FDA’s Risk Evaluation and Management Strategies.

“Proposals to change to Medicare, Medicaid, and 340B are not bipartisan or vetted enough,” Harris said in a separate note.

“Election year politics ensure neither party will vote to give the other a win on a popular issue.”

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