While some analysts say Donald Trump is a wild card when it comes to drug pricing, many argue his presidency would be more positive for the industry overall, as Kamala Harris has her price-cutting sights squarely on Big Pharma.
With one week left until the 2024 presidential election, the tight race between Vice President Kamala Harris and former President Donald Trump is causing much speculation about what a victory for either candidate will ultimately mean for the biopharma industry.
While the political contest is too close to call, analysts and stakeholders have weighed in on the high-profile biopharma issues—including drug pricing reforms—that could figure prominently in the new administration.
“A Trump win would be overall more positive for biopharma sentiment,” contended BMO Capital Markets analysts Evan Seigerman and Kostas Biliouris in a recent note to investors.
Under a second Trump presidency, the market can rest assured that the Inflation Reduction Act (IRA) will not be expanded—in fact, there is speculation it may even be repealed—and that the Federal Trade Commission (FTC) will shift its focus away from biopharma, and drug pricing reform will target pharmacy benefit managers (PBMs), according to Seigerman and Biliouris.
On the other hand, Harris in her economic plan makes the case that both PBMs and Big Pharma are to blame for inflated prescription drug prices, and her administration “will crack down on pharmaceutical companies that block competition and abusive practices by pharmaceutical middlemen who squeeze small pharmacies’ profits and raise costs for consumers.”
As we await election day, the biopharma industry is at the peak of reporting third-quarter earnings. But as Seigerman remarked in a note earlier this month, Q3 earnings season “feels like the calm before the storm with many investors on the sidelines ahead of the U.S. election.”
The Trump Drug Pricing Wild Card
While Trump hasn’t made drug pricing a focus of his 2024 campaign as he did in the run-ups to the 2016 and 2020 presidential elections, Kirsten Axelsen, a nonresident fellow at the American Enterprise Institute, pointed out to BioSpace that “Trump is one of the few Republicans who supported price controls on drugs—that has not typically been a Republican stance.”
It’s a sentiment echoed by John Stanford, executive director of Incubate, a Washington-based coalition of life sciences venture capitalists. Stanford told BioSpace that in a second presidential term, Trump could make cuts to drug pricing a part of his agenda. “I think he’s shown a willingness to use any tool in the toolbox to react to populist priorities,” Stanford said. “It’s hard to cross anything off the [policy] menu with him.”
Stanford pointed out that near the end of Trump’s term, in September 2020, he signed an executive order that Medicare would not pay more for certain drugs than the lowest price for that medication in any member nation of the Organisation for Economic Co-operation and Development. That order was challenged by lawsuits from industry, quickly struck down in court, and in December 2021 CMS rescinded the “most favored nation model” under the Biden administration.
While Trump’s campaign released a video last year indicating that on Day 1 of his second term he would sign a similar executive order informing Big Pharma “that we will only pay the best price they offer to foreign nations” for drugs, a Trump campaign spokesperson provided a statement to STAT in October saying that Trump no longer stands by this statement and that the video has been removed from the campaign site.
“We have a concerned eye on those policies” of most-favored nations clause and reference pricing should Trump get elected to a second term, Stanford said, adding that Incubate hasn’t seen anything from the Trump campaign that gives the VC lobbying group “confidence one way or the other. . .Hopefully that’s not something we have to tackle again.”
Another open question regarding a Trump presidency is whether he would seek to repeal the IRA. Harris cast the tie-breaking vote in the Senate for the bill and President Joe Biden signed the IRA into law in 2022—the Biden-Harris administration’s crowning legislative achievement, empowering Medicare for the first time to negotiate prescription drug prices.
Project 2025, a blueprint for a potential second Trump term drafted by the conservative Heritage Foundation think tank, calls for repealing the IRA. According to Project 2025’s chapter on the Department of Health and Human Services (HHS), the IRA’s Medicare Drug Price Negotiation Program “replaced the existing private-sector negotiations in Part D with government price controls for prescription drugs” that “will limit access to medications and reduce patient access to new medication.”
While Trump has repeatedly tried to distance himself from Project 2025, more than half the document’s hundreds of contributors worked in his administration, on his transition team or for one of his presidential campaigns, according to The New York Times.
Harris contends that Trump and his allies want to undo the progress the Biden-Harris administration made in lowering prescription drug costs, touting the new prices for the initial 10 drugs negotiated between Medicare and drugmakers under the IRA’s Drug Price Negotiation Program.
“His Project 2025 agenda calls for repealing the Inflation Reduction Act, including the key provisions that lower seniors’ prescription drug costs,” states Harris’ economic plan. “Trump wants us to go back to a world where millions of seniors have to choose between filling their lifesaving prescriptions and buying enough food for the month.”
Harris Targets Big Pharma
If Trump’s policy priorities when it comes to drug pricing appear to be all over the map, Harris’ economic plan, A New Way Forward for the Middle Class, has Big Pharma squarely in its sights.
The Harris plan calls for accelerating the speed of Medicare prescription drug negotiations by expanding the IRA’s cost-saving provisions to benefit all Americans. “Harris will allow Medicare to accelerate the speed of negotiations so the prices of more drugs come down faster.”
A controversial policy area rife with speculation—should Harris win the presidency—involves the potential for her administration to invoke so-called “march-in rights” under the Bayh-Dole Act of 1980 to take back patents of specific expensive drugs that rely on federally funded research. Whereas Trump is unlikely to push for march-in rights to undermine industry’s intellectual property (IP), given the traditional pro-business, free market and property rights of the Republican party, Stanford said, Harris might.
Following a nine-month review, the Biden-Harris administration through the Department of Commerce’s National Institute of Standards and Technology published a draft guidance framework on march-in rights in December 2023. Two months later, 78 members of Congress and the Senate called for the use of march-in rights against pharma companies in a letter to HHS and the Department of Commerce.
The lawmakers in their letter specifically called out the price of Astellas and Pfizer’s prostate cancer drug Xtandi, which they contend is six times higher in the U.S. than in other countries. By charging exorbitant prices, the letter states that companies have violated the Bayh-Dole Act’s requirement to make the invention available to the public on reasonable terms.
“I would imagine a Harris administration would pursue march-in rights. Whether or not they would actually see them able to be exercised is a question for the law,” Axelsen said. However, she warned that “exercising march-in rights would make partnerships with academic institutions toxic because if they take money from the federal government, like NIH funding as many of them do, they would be riskier to partner with.”
Bayh-Dole patents make up a large share of patents in bioscience-related categories such as biotechnology (15%) and pharmaceuticals (8%), according to a 2023 Georgetown University study.
The study found that most of the top Bayh-Dole patent holders in the field of biotech are academic institutions, with 22 of the 25 organizations listed as universities. “Notably, there are no private companies among the top 25 most prolific biotechnology Bayh-Dole patent holders,” according to the study authors.
Axelsen maintains that march-in rights are “the worst way to control drug expenses” and apply to a relatively limited number of drugs. “Just by taking away the patents doesn’t guarantee that there would be a generics company stepping up to supply the drugs at a lower price,” she said. “There are plenty of drugs without patent protections that still face either generics shortages or nobody interested in supplying them.”
Gillian Woollett, vice president, head of regulatory strategy and policy at Samsung Bioepis, agreed. “Yes, IP is important,” Woollett told BioSpace. But “the bigger issue is on the average times of exclusivity before they get competition, which is running 20 to 30 years.”
Still, it could very well be something the industry must contend with should Harris take the White House in January. While the vice president “has not spoken out specifically on using march-in [rights],” Stanford said, she “was a part of an administration that certainly had no issue pursuing one of the most aggressive, progressive viewpoints on march-in rights—we still hope that common sense will win the day there.”
