President Trump – Drug Companies ‘Getting Away With Murder’

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Monday President Trump again voiced the need to tamp down the rising accelerating drug prices:

Another thing we are doing as it relates to people’s lives is that prescription drug prices are out of control. The drug prices have gone through the roof. If you look at the same exact drug made by the same exact company, made in the same exact box and sold some place else … sometimes it’s a fraction of what we pay in this country … As usual the world is taking advantage of the United States. They are setting prices in other countries and we’re not.

The drug companies frankly, are getting away with murder, and we want to bring our prices down to what other countries are paying or at least close.

The rising cost of healthcare and/or drug prices was a major issue during the presidential elections. The president needs to understand that drug companies have no incentive to voluntarily low drug prices. Biotech M&A was $35 billion in 2016 and at nearly $12 billion so far this year. Companies might need to keep prices high to get a an acceptable return from those deals. Allergan (AGN) recently transferred patents to an Indian tribe in an attempt to defend them against generic competition. High drug prices might be necessary to help Allergan service $30 billion in debt built up from prior biotech deals. Below is my take on how the president can start delivering on lowering drug costs.

Continue To Accelerate Generic Drug Approvals

In 2016 the Senate Special Committee on Aging completed a study on how to reduce price-gouging by drug companies. One of its recommendations was to prioritize the FDA review of generic drug applications for certain off-patent prescription drugs. New FDA commissioner Scott Gottlieb has made it a point of emphasis to bring more competition to the drug market. The FDA recently approved a generic version of Copaxone, Teva’s (TEVA) high-priced multiple scleroris treatment. Analysts had not expected a generic version of Copaxone until 2018.

The work done by the senate and the FDA’s emphasis on accelerating generic competition might have led to generic Copaxone’s approval earlier than expected. More examples of this could help keep a lid rising on prices for certain off-patent drugs.

Help Medicare, Medicaid Negotiate Better Drug Prices

Europe has a single-payer system and the Japanese government covers about 40% of its country’s healthcare costs. They wield their large buying power to negotiate low drug prices. The U.S. government through Medicare and Medicaid is the largest buyer of drugs in this country. However, in my opinion, Medicare and Medicaid could do a better job of negotiating lower prices for certain drugs.

President Trump has intimated that we should move to a single payer healthcare system like they have in Europe. For now, it could be useful for the government to determine which drugs could be candidates for price reductions. In the past HCV drugs like Gilead’s Harvoni represented the biggest payout for Medicare and Medicaid. Such drugs can cost over $80,000 per regiment prior to discounts. Europe and Japan pay much lower prices for HCV than the U.S. In fact, Japan implemented mandatory price roll backs for HCV in early 2016.

Another expensive drug is Mallinckrodt’s (MNK) Acthar; on a per patient basis it is one of the highest-priced drugs reimbursed by Medicaid and Medicare. Per Business Insider the price of a vial increased from $748 in 2001 to $40,000 today. Critics from Citron’s Andrew Left to the Journal of the American Medical Association have questioned the effectiveness of Acthar for certain indications. That said, Acthar and HCV drugs – amongst others – appear to be two candidates for price cuts given their out-sized sales to Medicare and Medicaid.

Conclusion

I do not believe pharmaceutical companies will cut drug prices voluntarily. It would behoove the president to continue to prioritize FDA approval of drug applications and help Medicare and Medicaid negotiate better prices for certain high-priced drugs.

 

On Shock Exchange

Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead explains the stock market and U.S. economy through the eyes of the New York Shock Exchange, a financial literacy program Ralph Baker started in 2006 to share his passion for investing and basketball with his 11-year-old son and other boys his age. The book predicts the “pain ahead” for the U.S. economy, the demise of China, the pending stock market crash and social unrest.

Shock Exchange has been trumpeted by President Obama, the Senate Finance Committee and House Ways and Means Committee. However, they conveniently forgot to cite the source. Critics try to make and unmake authors, but the market always decides. The book was also recently added to Trump Syllabus K12, crafted by Dr. Kaye Wise Whitehead of Loyola University Maryland. Shock Exchange is the best book on Wall Street in the past 20 years, and on economics, it may be the most important book since the Great Depression.

On Trump And the Global Economy

Shock Exchange is also the only book from a black author that speaks to Donald Trump, his rise to power, and gives incite into how he will eventually lead as president. The book prompted the popular town meeting, Trump And The Global Economy. The town hall brings together a cross-section of individuals to discuss everything from President Trump’s policies on economics, immigration and foreign affairs to what his election actually says about America. There have been several events pursuant to “resisting” Trump, but the Trump And The Global Economy gives to give the public real information, seek new directions and solutions from professionals and everyone on the front lines.

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