Pharma’s Virus Response May Impact Trump’s Drug Pricing Plans

(Bloomberg) -- The pharmaceutical industry's push to combat the spreading coronavirus could deter the implementation of some drug- pricing policies from both the White House and Congress, according to Height Capital Markets.

As companies ramp up developments for therapies and express optimism on their potential success, their partnership with President Trump could push him to “change the existing, negative narrative and deter serious drug-pricing actions,” analysts led by Hunter Hammond said in a note.

The research team cut its expectation that Trump will release a model linking prices paid to an international index -- a model dubbed IPI -- to 60% from 75% due to the coronavirus and the industry's response. The group also said “the President could be convinced to withhold additional support for the Senate Finance Committee's drug-pricing bill.”

President Trump has been expected to do something to cut drug prices ahead of the 2020 election as he looks to fend off Democratic rivals that have attacked his claims to do just that. Those plans could be impacted as his administration tries to allay concerns surrounding the coronavirus in the wake of an emergency interest-rate cut Tuesday by the U.S. Federal Reserve.

On the Line

The Height analysts also highlighted that plans could be put on hold in the near-term, if the drug industry lobbying group Pharmaceutical Research and Manufacturers of America -- PhRMA -- can craft a narrative that makes lawmakers and President Trump unwilling to challenge drugmakers with innovative solutions to the virus on the line, especially with developments in the public's view.

“Innovation forms the crux of PhRMA's argument, and the White House could lean in to that argument,” they said.

Related: Drug Cos. Discuss Coronavirus Treatments, Vaccines with Trump

Despite their optimism that drug pricing plans will be paused, Height reiterated its belief that Trump is incentivized to release a model to boost his run at re-election in November.

Executives from drug developers including Gilead Sciences Inc., Moderna Inc. and Regeneron Pharmaceuticals Inc. met with Trump and his staff Monday to discuss development of medicines.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Lisa Wolfson

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