The Brave New World of Healthcare in America: The President-Elect’s Impact on Pharma

By | 2017-06-27T08:31:37+00:00 December 12, 2016|Events, Healthcare Trends, Insights, Marketing, Viewpoints|

The Coalition for Healthcare Communication (CHC) summit in Washington, D.C., in late November was an interesting postmortem of the 2016 election, and a look into the crystal ball by some of our industry’s most knowledgeable leaders. The CHC is a nonprofit organization that serves as pharma’s advocate with the FDA and members of Congress as well as an industry think tank and educational resource.

The main topic of discussion was what President-Elect Trump would—or wouldn’t—do to alter the healthcare landscape as we know it. As the Kaiser Family Foundation put it, “the election’s outcome will be a major determining factor in the country’s future healthcare policy.” Issues such as repeal or replacement of the ACA, structurally changing Medicare and Medicaid, drug price controls and importation of cheaper drugs from overseas, and reproductive health hang in the balance—if one can separate Trump’s rhetoric from his actions.

John Kamp, the CHC’s Executive Director, said that Trump is a blank slate on many of these issues. As Salena Zito wrote in The Atlantic, the press takes Trump literally but not seriously; his supporters take him seriously, but not literally. The tea leaves are in a murky brew at this point.

The price of drugs

Sharon Callahan, CEO at TBWA\WorldHealth and CHC Board Chair, opened the summit with cautious optimism. “I expected us to continue our focus on the drug pricing issue, but the one candidate who didn’t say much about drug pricing will be the president of the United States. Maybe we can use this lack of noise to get our message out there—take a lesson from Trump and sell our brand.” Later that morning, Mike McCaughan, Senior Editor at Prevision Policy and the RPM Report, agreed with Sharon—for the most part.

Prevision Policy is a Washington-based firm specializing in tracking, accessing, and explaining regulatory and reimbursement policy to the biopharmaceutical industry. McCaughan said the drug pricing issue is not going away, but agreed that the industry “has a golden opportunity to make the message be about the value of medicines.” It should be noted that pharma stocks rose sharply following Trump’s election, mainly on the hope that price controls will take a back seat to other issues. Since then, the president-elect has sent some mixed signals on pricing, causing a moderate degree of nervousness among some pharma executives.

The move to repeal or replace Obamacare

Pam Jenkins, President of Powell Tate/Weber Shandwick, a large Washington-based public relations and public policy firm, also agreed that “now there is a reason to go out there and get your voice heard.” She then addressed the elephant in the room. “One thing is for sure,” she said. “After 50 attempts to repeal Obamacare, there will be a 51st attempt, but Trump has said he won’t rip healthcare from 20 million Americans.” But she added that Trump could use budget reconciliation to selectively strip out pieces of the program; budget reconciliation needs only 50 senate votes to pass, whereas repeal would require 60 votes. Mike McGaughan from Prevision Policy posed an interesting possible scenario: Trump is convinced “repeal or replace” of Obamacare will happen in the first 100 days. Congress could repeal it now, make it effective in 2019, and then work on what “replace” will be. But that assumes 60 votes to repeal in the Senate, which is far from certain; taking coverage away from 20 million people could give pause to legislators on both sides of the aisle.

Elimination of advertising dollars as an allowable business expense

Peter Kosmala, SVP for Government Relations at the American Association of Advertising Agencies, had some sobering thoughts regarding reducing or eliminating pharma tax deductions for advertising expenses. An idea that has gained support in Congress over the last several years, such a move represents an existential threat to the business as we know it. Speaker of the House Paul Ryan is passionate about tax reform and has said that everything is on the table. “I think that we will see tax code reform,” Kosmala said; making sure that advertising costs remain deductible has been a key focus of the CHC.

DTC—here to stay?

Kosmala predicted that conservative additions to the Supreme Court are likely to uphold commercial free speech. This bodes well for protecting DTC advertising, despite the fact that a variety of forces—from the AMA to numerous politicians—are gunning for DTC. However, Prevision Policy’s Mike McCaughan said that Trump’s vow to shake up the FDA is concerning—FDA changes to DTC advertising rules, while short of eliminating DTC, could disrupt the industry. “The biggest risk for pharma is that the FDA climate gets worse, and right now it’s the best FDA climate of all time,” McCaughan said. “When you are at the peak, gravity is not your friend.” The CHC’s John Kamp, however, said that although change is coming to the FDA, there are only five political appointees at the agency. “For example,” he said, “OPDP head Tom Abrams is not a political appointee.”

The best defense is a good offense

Several speakers, starting with CHC Board Chair Sharon Callahan, emphasized how important it will be to emphasize the value proposition that pharma represents. “I don’t think there are any easy answers here. We clearly need a narrative that’s easy to understand and we have an opportunity to create that.” When asked how to describe the value of healthcare in a populist way, Pam Jenkins of Powell Tate/Weber Shandwick said, “The hope for cures. Remind people of the power and the promise of research.” In other words, pharma has a positive message and it’s our job to ensure that it is heard.

About the Author:

Robert Palmer

EVP, Digital Innovation Officer

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