What will a Trump Administration mean to the healthcare industry? So much is unknown – either because President-elect Trump has spoken in generalities, or he has changed course pre-and post-election, as evidenced by recent post on the presidential transition website (see statement here).
It notes, “The Administration recognizes that the problems with the U.S. health-care system did not begin with – and will not end with the repeal of – the ACA.” That statement suggests a more sweeping look at the delivery of healthcare in this country – one that perhaps will lead to novel solutions and proposals that we have not considered before.
- The impact on “healthcare” will vary depending on the healthcare sub-sector.
- The Affordable Care Act (ACA), as we know, it will not survive.
- The ACA will not be the only part of the US healthcare system that will be challenged or under scrutiny.
The ACA: Trump has repeatedly said he will dismantle the ACA, but that he may keep some of its more popular elements – allowing young adults to stay on their parents’ plans till they are 26, ensuring insurers cannot refuse coverage to those with pre-existing conditions, and indicated support for Health Savings Accounts. However, insurers agreed in part to cover those with pre-existing conditions based on the premise that other parts of the ACA would drive large numbers of healthy people into their plans, offsetting those who were sick. References to “high risk pools” suggest that the provision of coverage for those with pre-existing conditions may take another form.
Drug Pricing: Given soaring share prices last week, the market doesn’t seem to expect the new administration to rein in drug and biotech pricing any time soon, despite Trump’s support for allowing Medicare to negotiate drug pricing. He has signaled that he wants to speed drug approvals, perhaps suggesting that increased competition will increase pricing. It remains to be seen whether that could lead to additional FDA funding, increased user fees, changes in the priority given to new drug application (NDA) review, or even a challenge to the Orphan Drug Act (which grants drug makers seven years of exclusivity on drugs that treat orphan diseases).
Revved-Up Deal Making: After a spectacular 2015 for healthcare M&A, life sciences deal making is down 65% from last year. While many suggest the best targets were snapped up last year, other industry watchers say many biopharma companies have been reluctant to sell with depressed stock prices impacting their valuations. With stock prices on the rise they can command a greater premium – but they’ve also become more expensive.
Corporate Tax Reform: Acquiring companies may also have more cash to spend; Trump has suggested allowing U.S. companies to pay a lower tax rate when repatriating cash back stateside. Pharma is understandably interested in having more freedom to deploy this cash as well as corporate tax reform in general, as demonstrated in part by their interest in inversions in recent years.
Medicaid and Medicare: Trump has said he will “modernize” Medicare and suggested that the program may be privatized. This may play well with Republicans who have advocated for providing people with vouchers to put toward buying private health insurance. He has also suggested sending Medicaid funds as block grants to states.
The NIH & Scientific Community: Funding for these institutions is a concern by many. President-elect Trump has said: “In a time of limited resources, one must ensure that the nation is getting the greatest bang for the buck. We cannot simply throw money at these institutions and assume that the nation will be well served… What we ought to focus on is assessing where we need to be as a nation and then applying resources to those areas where we need the most work.” The scientific community also has understandable concerns that Trump’s professed stance on immigration will hurt their ability to attract the best talent from around the world.
There are more questions than answers. How will he reform the FDA and who will lead it? Who will be the next Secretary of Health and Human Services? What happens to Planned Parenthood and support for women’s and reproductive health? What about the 20th Century Cures Act, the Precision Medicine Initiative and Vice President Biden’s cancer moonshot initiative, which have strong bipartisan support during a lame duck session of Congress now underway?
As evidenced by his reconsideration of repealing all of Obamacare after a meeting with President Obama last week, President-elect Trump will no doubt benefit from industry taking a leadership role in advocating for a path forward that supports patients, thinking creatively about changes that will improve the delivery of healthcare, and working to protect the things that have made the U.S. a leader in science and innovation.