Restraining rising drug prices is one of the few policy goals held in common by Republicans and Democrats, with President Donald Trump as well as nominee Joseph Biden both embracing initiatives to drive down costs.
The issue almost certainly will not go away over the course of the next administration, whatever the outcome of the 2020 election. The results, however, could dictate the shape of the drug-price debate over the coming two to four years, with control of Congress as well of the White House determining what legislation, if any, is possible.
No matter who is elected, lawmakers in upcoming months will be reliant on pharmaceutical companies like Pfizer, Moderna, Regeneron and Eli Lilly to deliver preventive vaccines and therapeutics to help bring the coronavirus pandemic under control. That could forestall any drug price legislation into late 2021 at the earliest, wrote Geoffrey Porges, an analyst at SVB Leerink, in a research note based on interviews with policy experts.
Yet the pandemic is likely to ease sometime over the next two years, providing an opportunity for lawmakers to take another swing at drug price reform. The election results, then, will help define whether legislation can pass and what it may look like.
Three scenarios could emerge. In the status quo case, where Trump wins the White House and the current congressional split of Republican Senate control and a Democratic House majority remains, Trump will likely forge ahead with controversial executive orders, such as one to tie some Medicare prices to what's paid overseas.
In that scenario, the House and Senate would likely struggle to come to agreement on national drug price legislation, although the House could once again pass its bill that entailed direct negotiation between the federal government and drugmakers "in order to reclaim momentum around drug pricing as an issue," according to a note from Cowen analyst Rick Weissenstein.
In the event of a Biden victory, but the Senate remaining in Republican hands, House Democrats might be willing to compromise to deliver a win for the president. But Senate Republicans may elect not to pass any legislation at all.
The full Senate, for example, has never taken action on legislation that passed the Finance Committee in mid-2019, which would have capped price increases in Medicare and given providers incentives to use copycat biologic drugs known as biosimilars.
A Democratic sweep, by contrast, would increase the odds the House Democrats' legislation could pass. Senate rules requiring a supermajority to ratify many bills, though, might lead to the removal of more contentious provisions, Porges wrote.
According to a survey done by Cowen analyst Steve Scala, executives at three insurers forecasted drug prices would likely increase by 5% in every scenario excepting a Democratic sweep, in which case two of the three predicted a 5% decline.
The prospect of a Democratic sweep, Scala wrote, appeared reflected in investors' views of the biopharma sector. Pharmaceutical company share prices sit near 30-year lows when measured on a price-to-earnings ratio, which is a sign investors have low expectations of revenue growth in the coming years.