It appears drug companies and their investors have little to fear from President Trump's latest salvo aimed at holding down prescription drug prices.
Last week Trump signed a series of four executive orders he claimed will control pharmaceutical costs. But the action was quickly dismissed by many as being heavy on style and weak on substance. Some of the executive orders are unlikely to ever be implemented. Moreover, the orders require new regulations that ordinarily take months to finalize.
The proposals would help only a small group of people, according to comments by Peter Maybarduk, director of Public Citizen's Access to Medicines program, in a Los Angeles Times article. "Tjey are pathetically small compared to the massive executive power Trump could use to make medicines affordable and available for all if he were willing to stand up to Big Pharma," Maybarduk said.
The orders focus strictly on discounts for insulin and epinephrine, eliminating rebates, allowing importation and creating an index tying U.S. prices to those elsewhere.
Not surprisingly, the drug industry opposes the executive orders. In fact, it was reported that company CEOs refused Trump's invitation to meet with him at the White House.
BioPharma Dive reported that Pfizer Inc. (NYSE:PFE) CEO Albert Bourla, speaking on a company earnings call, said the request for a meeting was poorly timed, given that the industry's priority is working on vaccines and treatments for Covid-19.
"There's no need right now for a White House meeting," he said. "But I believe there is a need for a dialogue so we can move forward." Comments by Stephen Ubi, CEO of the industry trade group PhRMA, were much more pointed. He called the orders a "reckless distraction that impedes our ability to respond to the current pandemic--and those we could face in the future."
"The president's attempt to open our country up to socialized healthcare sets America, our economic recovery and scientific progress back at a time when we need them most," he added.
Even Republicans seems opposed to an international pricing index, which would likely face legal challenges.
Analysts seemed to dismiss the orders as much ado about nothing. FiercePharma reported that in a note to clients, RBC Capital Markets analyst Randall Stanicky said how the rules will be implemented remains "far from clear" and the orders will likely be limited to federal health care programs. He sees no major threat to pharma's pricing model, and while the headlines will continue, "we see little impact," Stanicky wrote.
The industry and its investors appear to be out of the woods, at least for now. Presumptive Democratic Presidential nominee Joe Biden supports Medicare price negotiation, as do voters in both parties. Giving Medicare the authority to bargain on drug prices has the potential to have a major impact on pharma companies' sales and profits.
Disclosure: The author holds a position in Pfizer.
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This article first appeared on GuruFocus.