Donald Trump is sending mixed messages to the drug industry.
Trump said in his January 11 press conference that drug companies are “getting away with murder.”
“We’re the largest buyer of drugs in the world and yet we don’t bid properly,” he said at the time. “We’re going to start bidding and we’re going to save billions of dollars over a period of time.”
That’s something the government isn’t allowed to do for Medicare and Medicaid.
On Tuesday January 31, Trump met with pharma CEOs, and still seemed keen to target high drug prices, calling them “astronomical.” He added that he is interested in helping streamline the regulatory process drugs have to go through and in bringing back drug manufacturing to the states.
The executives — and the industry — came out of the meeting with a positive impression.
Eli Lilly CEO David Ricks said that Trump’s drug pricing policy didn’t get discussed detail in the meeting, leaving some ambiguity about what the president will end up doing. Merck CEO Ken Frazier said in an earnings call Thursday February 2 that he came out with the impression that there were a few possible options, of which negotiating wasn’t the top pick.
“That is not perceived to be the solution to the problem,” Frazier said.
While waiting for the final word, some companies in the industry have stepped up their self-policing game by committing to price-increase caps, or providing more transparency about what share of the list price a company actually gets.
The latest to formally put a lid on is Japanese drugmaker, Takeda.
“Takeda has for many years been reasonable in its price increases in the US and we are very committed to single-digit price increase,” Takeda CEO Christophe Weber told Reuters.
Pharmaceutical companies have been criticised for their routine list price increases, which are often the only numbers the public has access to.
But, as many have argued, the list price doesn’t tell the whole story. There are other players in the system that each take a piece, which means that what a drugmaker actually receives could be lower even as the list price rises. Some companies have opted to display their net prices on average to illustrate that point.
To recap, here’s how companies have confronted drug pricing pressure:
- After facing heat for the increased price of the EpiPen in August 2016, Mylan broke out its net price for the device as a way to illustrate how the list price differs from what the company actually gets.
- Allergan was the first to commit in September 2016 to only single-digit price increases once a year (a line the company hugged quite closely)
- Novo Nordisk did the same in December.
- AbbVie committed to only single-digit price increases, but just for 2017.
- Merck published a report that outlined the company’s average list price increases for its products.
- Johnson & Johnson plans to join in with Merck in February with a report on their list and net prices on average.
NOW WATCH: The reason millennials became obsessed with payment app Venmo has nothing to do with money
Business Insider Emails & Alerts
Site highlights each day to your inbox.