Pres. Trump's push to lower drug prices 'is a good starting point', says Dr. Scott Gottlieb

Key Concepts

• Drug pricing in the US vs. other developed countries (Europe)
• Most Favored Nation (MFN) pricing
• Tiered drug pricing based on national wealth
• US Trade Representative (USTR) role in enforcing drug pricing
• FDA staff departures and impact on drug reviews
• Gene therapy regulation
• Political meddling at the FDA and its impact on morale

Drug Pricing and the "Most Favored Nation" Approach

• President Trump's initiative: The President is pushing for pharma companies to lower drug prices in the US within 60 days, aiming to address the perceived unfairness compared to Western allies (primarily in Europe) who pay significantly less for pharmaceuticals.
• Previous attempts and legal challenges: A previous executive order during Trump's first term was struck down by the courts. The current approach seems to be leaning towards negotiation and "jawboning" due to difficulties in establishing a regulatory framework that can withstand judicial review.
• Prospective vs. Retrospective application: The President's letter acknowledges that the price changes should apply prospectively, meaning companies won't have to renegotiate existing prices in other countries. This primarily targets new drug launches within the commercial and Medicare markets.
• MFN pricing in Medicaid: A key point of contention is the President's demand for companies to offer the MFN price from day one within the Medicaid program. This could significantly impact company revenues, as the difference between the MFN price (unspecified in the letter) and the current Medicaid price can be substantial for single-source drugs.
• Tiered Pricing: Gottlieb advocates for a tiered pricing system globally, where drug prices are adjusted based on a nation's wealth (GDP per capita). He uses the example of Germany (GDP per capita of $54,000) versus Vietnam (GDP per capita of $4,000) to illustrate the disparity.
• USTR's Role: The USTR would need to enforce such a system. The discussion suggests that the goal is not solely to lower prices in the US but also to potentially raise prices in other developed countries, with the US supporting companies in pushing back against pricing authorities globally.
• Free Trade Agreements: Gottlieb suggests revisiting the inclusion of drug pricing provisions in free trade agreements, similar to what was done with Australia and South Korea.
• Direct-to-Consumer Portal: An idea being discussed is a direct-to-consumer online portal where companies would sell drugs directly to underinsured or uninsured individuals at MFN-type pricing for heavily rebated drugs. This could provide immediate savings to certain consumers.

Historical Context of Drug Pricing Disparities

• US inaction: US authorities allowed other countries to implement price control regimes without adequately supporting manufacturers in pushing back.
• Timeline: This trend largely occurred in the late 1990s and early 2000s, with countries like the UK and Germany implementing stricter provisions in the mid to late 2000s.
• Company incentives: Companies are incentivized to sell drugs at prices that the market can bear, as the cost of goods is relatively low. Even selling at 50% of the US price in a country like Germany can still be profitable.
• Compulsory Licensing: Gottlieb emphasizes the need for US government support to prevent compulsory licensing of medicines in countries that resist world pricing.

FDA Issues: Staff Departures and Gene Therapy Regulation

• Gene Therapy Concerns: Recent issues with gene therapy regulation, particularly concerning Sarepta, have raised concerns.
• Leadership Departure: The recent departure of the head of the FDA's biologics center surprised both the market and companies, with some CEOs expressing feeling that "the rug was pulled out from us at the 11th hour."
• Staff Exodus: The FDA is experiencing a significant loss of scientific staff. The biologics center has seen 106 departures since the beginning of the year, in addition to 150 RIFs (Reductions in Force). The drug center has lost a third of its reviewers for breast and gynecological cancer products and over half of its malignant heme product reviewers. Overall, there have been 473 voluntary departures of medical reviewers, plus 600 RIFs, representing over 20% of the center.
• Impact on Reviews: This "hollowing out" of scientific staff is impacting early drug reviews. Small companies report less robust feedback and engagement with the agency. BIO (Biotechnology Innovation Organization) is quantifying this decline in the quality and pace of interactions through a survey of its members.
• Vinay Prasad's Departure: Vinay Prasad's departure is expected to improve morale within the biologics center.
• Political Meddling: There are concerns about political meddling at the FDA, particularly regarding vaccine oversight. The discussion mentions a potential scenario where an "anti-vaxxer" could be appointed to oversee the vaccine division, which would further erode morale and undermine the agency's scientific integrity.
• Need for Rebuilding: Gottlieb stresses the need to "get back to basics" with the FDA and support its public health mission.

Conclusion

The discussion covers the complexities of drug pricing, the President's efforts to lower costs in the US, and the challenges facing the FDA due to staff departures and concerns about political interference. Gottlieb advocates for a tiered pricing system and emphasizes the importance of US government support for manufacturers in negotiating drug prices globally. He also highlights the need to rebuild the FDA's scientific staff and ensure its independence from political influence.