President Donald Trump told pharmaceutical industry leaders at the White House Tuesday that he wants to reduce "astronomical" drug prices, pare back regulations and increase prescription drug manufacturing in the U.S.
In a meeting also attended by Vice President Mike Pence, it appears that Trump offered no specific policies. But he mentioned boosting competition and encouraging “bidding wars” as a way to bring down prices. He also suggested he would pressure other countries to pay higher prices for drugs so that "they pay their fair share for U.S.-manufactured drugs." He argued that, "Right now, it's very unfair what other countries are doing to us."
The meeting was the latest example of Trump's strategy of personally pressuring companies to keep manufacturing jobs in the U.S. and to add more jobs in this country. Economists question whether that approach will work, given that corporate executives' main job is increasing value for shareholders, and making goods in countries where costs are cheaper increases profits.
The meeting is unlikely to satisfy mounting demands by consumers, insurers, employers and healthcare providers for strong action to curb sharply rising prescription drug prices. There is bipartisan legislation pending in Congress to encourage greater generic drug competition and price transparency. The drug industry opposes those measures.
In a written statement, Stephen Ubl, CEO of the Pharmaceutical Research and Manufacturers of America, a major industry lobbying group, called the meeting with Trump "positive" and "productive." He said the industry takes pricing concerns seriously, and looks forward to working with the administration to advance “market-based reforms.”
“The current system needs to evolve to enable the private sector to lead the move to a value-driven healthcare system,” Ubl said. “To do this, we need to reform existing laws and regulations that are currently preventing private companies from negotiating better deals and paying for medicines based on the value they provide to patients and our healthcare system.”
Trump assured drug firm leaders that his administration would do its part to eliminate regulatory obstacles. He said drugmakers must do their part to bring down prices and add jobs in the U.S. Attendees at the meeting included Ubl and top executives from Merck & Co., Johnson & Johnson, Celgene Corp., Amgen and Eli Lilly and Co.
At the same time, Trump hinted at a retreat from his previous support for letting Medicare negotiate prescription drug prices. “I'll oppose anything that makes it harder for smaller, younger companies to take the risk of bringing their product to a vibrantly competitive market,” Trump said, according to the Record newspaper of Hackensack, N.J. “That includes price-fixing by the biggest dog in the market, Medicare, which is what's happening. But we can increase competition and bidding wars, big time.”
“You folks have done a terrific job over the years, but we have to get prices down for a lot of reasons. We have no choice,” Trump said early in the meeting. “For Medicare, for Medicaid, we have to get the prices way down, so that's what we're going to be talking about.”
The president said his trade proposal would address the significant disparities between drug prices in the U.S. and other developed countries. Other advanced countries in Europe and around the world have national health insurance systems that negotiate prices with drugmakers and in some cases refuse to put higher-priced drugs on their formularies. Trump would run into fierce resistance from those countries if he tries to pressure them to pay higher prices.
Trump told the pharma executives that he'd be announcing his nominee for FDA commissioner to replace Dr. Robert Califf “fairly soon,” and that that person would streamline the FDA so that “you're going to get your products either approved or not approved, but it's going to be a quick process.” He said he was surprised that drugmakers must spend significant time and money on developing products that have no safety issues.
During his campaign, Trump said he supports allowing the CMS to negotiate directly with drugmakers on the drug prices it pays, and also said he supports allowing people to import cheaper drugs from other countries, such as Canada. Both of those positions are strongly opposed by the drug industry.
Jim O'Neill, one of the reported FDA commissioner candidates Trump is considering, has said he would like the FDA to focus more on evaluating the safety of devices and less on their effectiveness.
Drugmakers “have to” bring their manufacturing operations back into the U.S., Trump said, pledging that his administration will help them do that by eliminating excessive regulations.
Group purchasing organizations and providers have criticized drugmakers for not being transparent about the sourcing of active product ingredients or about outsourcing of manufacturing to third parties, sometimes in other countries. Some drug shortages have occurred because multiple drugmakers were using the same flawed active product ingredient supplier or third-party manufacturer.
Several drugmakers told White House reporters covering Tuesday's meeting that they were adding manufacturing jobs this year. Merck CEO Kenneth Frazier said his company has 23,000 American employees and has invested $7.5 billion in R&D almost entirely in the U.S. He also said Merck will manufacture a new cancer drug in the U.S.
Ubl said that trade policy and tax reforms were also a major part of the discussion with Trump. If certain policies are enacted, the industry can add over 350,000 new jobs over the next 10 years, he said.