Pharma rebounds on Trump retreat

U.S. President Donald Trump once said the drug industry was “getting away with murder,” but Wall Street is betting pharmaceutical firms could end up getting a relatively easy pass as the administration tackles rising drug prices.

In the past week, news outlets have reported that an executive order the Trump administration is preparing will contain industry-friendly policies instead of more aggressive proposals. The policies being considered include efforts to promote co-operative arrangements between drugmakers and insurers, speeding approval of new treatments, and finding ways to make other countries pay more for drugs, according to the reports.

“It just sounds more and more likely that the focus is going to be on removing barriers to entry rather than a direct attack on pricing,” said Brian Skorney at Robert W. Baird & Co. “That’s a pretty industry-friendly scenario if it does end up occurring.”

Biotech and pharma investors have taken note. The Nasdaq Biotech Index is up eight per cent since Friday’s close.

Trump’s January “getting away with murder” comment sparked fears that his administration might push for policies that would limit what drugmakers could charge. Instead, reports from Kaiser Health News, The New York Times and Bloomberg News suggest the coming executive order will ease regulatory hurdles for companies.

A White House spokesman declined to comment on the status of the executive order.

Administration officials met Friday to discuss the executive order, which people familiar with the matter have said may be ready within weeks, Bloomberg reported on June 15. The president has created a Drug Pricing and Innovation Working Group led by a former pharmaceutical lobbyist, Kaiser Health News reported on June 16.

The group has focused on four areas, according to Kaiser: Extending the patent life of drugs in foreign markets; promoting U.S. drug market competition; value-based agreements; and issuing U.S. Treasury bonds to drug manufacturers to help pay for expensive treatments.

The draft includes proposals championed directly by the drug industry, according to The New York Times, including easing a federal program requiring pharmaceutical companies give discounts to hospitals serving low-income patients.

Two Democrats, Rep. Elijah Cummings of Maryland and Rep. Peter Welch of Vermont, pushed back in a letter to the president Wednesday.

“Your statements and your promises gave many of us hope, but your planned executive actions suggest that you have abandoned these promises in favour of the very pharmaceutical lobby you warned of,” the two wrote.

Welch said he hadn’t heard back from the White House. “Instead of coming out with some specifics that would actually address the brutal price increases of prescription drugs, he came out with recommendations that essentially accommodate pharma,” Welch said.