USA Election: Comparing Clinton and Trump’s Planned Policies Affecting the Pharma / Biopharma Industry

As the party-convention season transitions to the final months of the election process, each candidate’s stance on healthcare policy is coming into focus.  Hence, a comparison of the two major candidates and their party platforms is a worthwhile exercise to understand how each candidate’s potential administration may affect the pharma and biopharma industries in the world’s largest market.

Based on stated policy agendas alone, one can surmise that healthcare policy includes some unusual agreement between the two lead candidates. While they unsurprisingly diverge on many aspects of healthcare reform (Clinton supports the Affordable Care Act and has plans to expand certain elements, while Trump has demanded a complete repeal and replacement) there are two specific policies that have earned vocal support from each candidate: Medicare negotiation on drug pricing in Part D, and reimportation of drugs from outside the USA.

That both of these policies have garnered popular support reflects the attention that the pharmaceutical and biopharmaceutical industries have seen during the past year.  Given that healthcare is such a high-priority issue for most voters, it comes as no surprise that the candidates have strong opinions on how they would address one of the more sensational aspects of it: pharmaceutical pricing.  The populist appeal of pharmaceutical pricing has been enhanced by public’s growing awareness of incongruity between prices paid in the USA relative to other developed countries.  More informed voters may be aware of annual price increase habits by the innovative industry, while even the passive electorate may have heard of TURING and Martin Shkreli on cable news.  This year, healthcare is not just a popular issue, but rather the affordability of innovative therapeutics is now very much top of mind for a large share of the electorate.

While each candidate has voiced support for these two policies, like many campaign promises, they are unlikely to have their intended effect, let alone even be implemented as legislation once the new president is in office.  Drug price negotiation between Medicare and manufacturers has a couple of major potential flaws. First, if there is national-level negotiation to reduce drug prices in the Medicare channel, Part D plans would be negotiating on top of those initial discounts. Manufacturers are not likely to want to offer additional rebates, reducing the ability of these plans to differentiate themselves and blunting the benefits of inter-plan competition. Second, the Congressional Budget Office estimates that even well-negotiated deals would only save the government a marginal amount.

Drug importation at a federally endorsed scale, such a policy would likely require the FDA to expand its inspection capabilities in other countries to include any manufacturing sites involved with drugs sold in the source country. With resources already constrained, the FDA would need a significant budgetary increase to manage this expanded scope.

While Clinton has repeatedly voiced her disapproval of certain ACA provisions (particularly the Cadillac Tax), she firmly supports maintaining the ACA. She has advocated expanding its coverage through a public option plan, as well as new initiatives to make it easier to sign up. Her health agenda online also reveals a variety of additional new policies that attempt to reduce consumer and government spending on pharmaceuticals. She has called for an end to direct-to-consumer advertising by pharmaceutical companies, expedited review of biosimilars for areas with limited competition, and an annual out-of-pocket prescription maximum of USD 250 across all payers. These huge reform policies should be reviewed with context, recognizing that any amount of reform will be difficult in the partisan environment of today’s congress. Healthcare is certainly an important issue for Hillary, both from her time spearheading Bill Clinton’s healthcare reform in the 1990’s and also during her time in the Senate on the health committee. While health has taken a back seat in this campaign cycle to issues like gun reform and immigration, it seems likely that Clinton would pick up the mantle Obama leaves behind and continue to try to achieve greater results through step-wise reform.

Donald Trump has been less clear on details about what he would install in place of the ACA. He stands on the Republican platform that has been offered in past elections, with key planks of converting Medicaid to block-grants, expanding the prevalence of health savings accounts, and providing an individual tax credit for all Americans to purchase health insurance. Elsewhere on the Republican ticket, the presence of Indiana governor Mike Pence does lend some insight into the Republican view on healthcare policy. The Pence administration in Indiana has received a mix of praise and reprimand for their Healthy Indiana Plan. This strongly market-oriented Medicaid variant earned them one of the rare expansion-waivers, enabling the state to use the federal Medicaid dollars in their own way with certain criteria attached. While the plan has met criticism for dropping some beneficiaries who fail to meet premium payments, it has seen some success in reducing overall costs to the state. In choosing Pence as his running mate, Trump may be signaling a preference for his style of state-level, market-based competition to improve healthcare efficiencies across the country.

The last year of the Obama administration has seen a resurgence of focus on healthcare, with the Vice President’s “Cancer Moonshot” bringing national focus and resources to a critical area of research. Obama also broke new ground as the first president published in the Journal of the American Medical Association, with an article in mid-July 2016 arguing in favor of a public-option insurance plan as a solution to the low-competition that exists in many states and counties on the insurance exchanges. This proposal, if it becomes a high priority for the Clinton administration, would likely create a contentious debate in Washington. A public-option was struck from the original ACA, amidst great opposition to its effects on the competitive dynamics of the health insurance market as well as on the national-level control in the healthcare system. While it is known that Obama is likely moving towards the health venture capital space after his presidency, his bold moves towards the end of this term could signal a renewed healthcare effort that Clinton could pick up as the new standard bearer for the Democratic party.

For their part, the pharmaceutical manufacturers seem to have come down decidedly on the side of Secretary Clinton, with over USD 350k in campaign donations so far, compared to less than USD 10k to Trump’s campaign as of this posting. This reflects a more widespread trend unusual to Corporate America, with Wall Street and other groups leaning Clinton’s way as well. While some of her rhetoric and policy proposals may complicate the pharmaceuticals market over the next 10 years, her views are clearly displayed, whereas Trump’s unpredictability casts a veil over what the industry could face under a Republican return to the White House.

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