Trump’s Bully Pulpit Pressure Isn’t Swaying Drugmakers on Prices
Health Care

Trump’s Bully Pulpit Pressure Isn’t Swaying Drugmakers on Prices

iStock photo

It's been more than a month since president Trump said drugmakers would announce “voluntary massive drops in prices” in two weeks, but Politico’s Sarah Karlin-Smith reports that many drug companies have been going the other way, especially with brand-name drugs: “A Wells Fargo report found 104 price increases in June and the first two days of July, with an average jump of 31.5 percent and a median increase of 9.4 percent. That followed 48 increases in May. The list price hikes don’t factor in discounts that companies may provide to some insurance companies and patients.”

Drug manufacturers typically post price hikes at this time of year. Health and Human Services Secretary Alex Azar told Congress last week that he hoped drug companies will “practice restraint” when raising prices. But the industry has little incentive to do so — and plenty of reason not to.

“Forgoing drug price hikes means forfeiting one of the few easy ways to boost their top and bottom lines,” writes The Wall Street Journal’s Charley Grant. “In certain cases, skipping a price hike could mean a decline in revenues if the drugmaker can’t offer a big enough rebate to middlemen in the supply chain.” And big drug companies have already been struggling to post the kind of growth shareholders want to see. Grant notes that their stocks have lagged the market for nearly two years.

“The industry isn’t taking the administration seriously on drug pricing because there doesn’t appear to be a credible threat if they don’t comply with these requests,” Stacie Dusetzina, a drug pricing expert at Vanderbilt University School of Medicine, told Politico’s Karlin-Smith. “While there are some items in the [Trump administration’s] recently released Drug Pricing Blueprint that explore ways to incentivize companies to not increase prices or to increase accountability for price hikes, these are a long way from being implemented.”

The bottom line: “The bully pulpit and rhetoric alone are proving insufficient to affect bad behavior on prices. Congress and the administration need to take action,” John Rother, president and CEO of the National Coalition on Health Care, told Politico.