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2017 pharma trends: Bon chance!

A US take on the power shift in Washington and what it could mean for the industry
2017 pharma trends: Bon chance!

The man is a gambler. Say what you like about the 45th president of the United States, but there is no denying the breadth of his achievement and the level of risk he took to get there. This reality TV star broke, upended and openly mocked every rule the political class ever held dear, spent one tenth of the money of his opponent 's campaign, and yet somehow still managed to pull off one of the most astonishing political victories in the history of western civilisation. How did he beat such long odds?

Unpredictability was at least one contributing factor. Donald Trump commanded our attention because we couldn't wait to see what he would do next. But while that strategy worked well as political stagecraft, it remains unclear how it will play out in the world of pharmaceutical commerce.

Potential government pressure on drug pricing in the US market, one of the few without price controls, tops the list of worries among pharmaceutical manufacturers for the coming year. Another big one is what form repeal or replacement of the Affordable Care Act (ACA) will take.

Finally, it should be noted that not everything that happens in US healthcare comes under Washington DC's control. Market forces that existed before Trump's election, such as the rising influence of pharmacy benefit managers (PBMs), will continue to be a factor throughout 2017.

Poker bluff? 
During the campaign, Hillary Clinton talked more about controlling rising drug pricing than Trump did. Industry spent the last year or so preparing for a Clinton presidency, reflected in languishing biotech stock prices and a slowdown in the mergers and acquisitions craze that had previously gripped the sector.

Nevertheless Trump did still make several mentions of the importance of drug cost curtailment. At various times he brought up the possibility of importing drugs from foreign countries (currently illegal in the states); and of rescinding the ban on Medicare's negotiating drug prices with manufacturers (a ban only extant since 2002, by the way). But then the real estate developer also backtracked on both positions several times.

Are Republicans willing to face the potential political backlash of stripping 20 million citizens of their health insurance?'

There is a widespread feeling across the political spectrum that something needs to be done about runaway drug costs. Scandal after pricing scandal has rocketed its way through our media outlets. Patients are going bankrupt; some are avoiding necessary surgeries for fear they cannot afford post-surgical medications. Public opinion of drug makers cannot get much lower. When an industry cures a deadly disease like Hepatitis C - and the only headline everyone remembers is the price of the drug - that industry has a serious public relations problem.

In early December, Trump told Time Magazine that he would curtail prices. “I don't like what's happening with drug pricing”, he said. 
But some see this as a poker bluff. “Since we know that Mr. Trump fancies himself a terrific negotiator,” said Lee Termini, president of a Pennsylvania-based consulting firm MediMedia Managed Markets, “one has to wonder whether his pledge to bring down drug prices is the first step of a negotiation meant to cause the drug industry to self-limit their own price increases before the federal government steps in.” 
Termini added that Allergan and Novo Nordisk have both pledged to limit price increases, with Novo Nordisk's CEO promising to keep increases under 10% this year. So perhaps Trump's bully pulpit strategy is already paying off.

Polarising reality
Unlike the electorate's relative unification on drug prices, repealing President Obama's signature legislation, the ACA, sometimes called 'Obamacare', which gave the healthcare industry 20 million new customers, is more divisive. A recent poll by the non-partisan Kaiser Family Foundation found that only 1 in 4 Americans wants Trump to repeal the healthcare law. Even among Republicans, only 52% now say they want a complete repeal, down from 69% who felt that way before the election.

But if Trump's appointments are any indication, the ACA will get a serious revamping. His pick for the department of Health and Human Services, Tom Price, a former physician and Republican Congressman from the southern state of Georgia, has been a vocal foe of the law. Price will oversee a vastly powerful branch of government that controls 11 operating divisions (including the FDA), with a budget of nearly a trillion dollars.

Republican leaders in Congress have indicated a willingness to 'repeal and replace', though replace with what is unclear. Procedurally, repeal would be relatively easy. The question is, are Republicans willing to face the potential political backlash of stripping 20 million citizens of their health insurance?

'Expect a vote at the start of the 105th Congress to repeal the ACA with a deadline of at least 1 October 2017, to have time to work among leaders to reach a final deal,' wrote Blair Childs, senior vice president of Premier Healthcare Alliance, a hospital management firm, in a weekly update report to clients. 'It is likely that Republicans will seek common ground with some Democrats to signal bipartisanship, avoiding a polarising reality like [the ones] we have faced for the past six years.'

Medicaid, the government programme that provides medical services to some 11 million low-income patients, will also probably take a beating. Republicans want to hand over Medicaid services to the states in the form of 'block grants', which usually translates into the poor receiving fewer services.

The ACA's coverage of female contraception will likely be undermined, as will women's abortion rights

Third-party players
Outside Washington's halls of power, expect pharmacy benefit managers to continue to have a strong influence on the US market. PBMs are third-party negotiators who strike deals with pharmaceutical companies and retail pharmacy chains, and then pass those savings along to health insurance plans and employers.

Faced with rising drug costs, over the last few years PBMs have grown more aggressive, using tools like prior authorisation, outcomes-based pricing and exclusionary contracts (basically kicking a drug off a formulary) in an effort to keep prices down. Even talk of excluding a drug can have a negative impact on sales. Early last year, the disappointing launches of two PCSK9s drugs, a new class of cholesterol therapy, were blamed on the nation's largest PBM threatening to exclude one of the drugs - despite the fact that the exclusion never actually happened.

The industry tends to judge PBMs on the spectrum of price, but they have made inroads elsewhere as well. Into the vast, fragmented, balkanised, siloed world of US healthcare, PBMs have injected a modicum of organisation. “Our PBMs claims data is integrated into our patient's electronic health records,” noted Susan Coutinho McAllister, MD, associate chief medical officer at Cooper University Health Care, a hospital in Camden, New Jersey. “Cooper teams can log into a patient's electronic health record to identify any medications the patient may have filled prior to coming to the hospital.” This reduces the potential for negative drug interactions and improves patient safety, she added.

No sure thing
Off the record, almost everyone in the pharmaceutical business admits that no one can predict what the next four years will bring. The new president got to where he is by defying expectations, and that is unlikely to change any time soon.

Perhaps the smartest play might be hedging on any potential drug or device aimed at the field of female reproductive health or abortion. “Tom Price has a zero rating from Planned Parenthood and 100 rating from the right-to-lifers,” says Debra Phairas, president of San Francisco-based Practice & Liability Consultants. The ACA's coverage of female contraception will likely be undermined, as will women's abortion rights. States are already passing restrictive anti-abortion laws, expecting a Supreme Court that includes Trump appointees to ratify them.

But even this remains far from certain. When it comes to making odds on what the future holds, everyone agrees: all bets are off.

Article by
Frank Celia

is a freelance writer based in the Philadelphia metro area of the US

17th January 2017

From: Healthcare

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