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Trump meets with drugmakers as industry fears price controls

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(Bloomberg) — Top U.S. drugmakers are heading to the White House Tuesday for a meeting with President Donald Trump, after he made a surprise attack on the industry this month, accusing the companies of “getting away with murder” and threatening to force them to bid for government business to lower medicines prices.

The gathering comes after Trump’s comments about the industry on Jan. 12 sent biotech and drug stocks plunging. In the meantime, drugmakers have turned up their lobbying efforts with Congress as a potentially friendlier force that might counter Trump.

Related: Pharma’s pricing troubles will get worse in 2017

They’ve been meeting with Republicans and Democratic members of Congress, including those in leadership, to make their case for more measured proposals than Trump’s, said Ron Cohen, chairman of the board at the Biotechnology Innovation Organization, a Washington lobby group for drugmakers. “Bidding” is essentially akin to drug companies’ greatest fear: handing Medicare the power to negotiate prices. They’ve also met with people in the Trump administration, Cohen, chief executive officer of Acorda Therapeutics Inc., said in a telephone interview.

Related: Trump’s health plan includes ACA repeal, drug re-importation

The drug industry is one of Washington’s most powerful, and each year spends hundreds of millions of dollars on lobbying, in addition to being one of the biggest donors to political campaigns, according to the Center for Responsive Politics. The lobby group Pharmaceutical Research and Manufacturers of America, or PhRMA, also launched an image makeover Jan. 23 that will feature advertising and public affairs events that focus on the value of its products.

Top CEOs

At the Tuesday meeting with be PhRMA CEO Stephen Ubl, Merck & Co. CEO Ken Frazier, Eli Lilly & Co.’s CEO Dave Ricks and potentially others, according to spokesmen for the companies and the lobby group.

Republicans generally have not backed proposals that require more government involvement and instead have aligned themselves with ideas that promote free-market principles. Even in the face of a Democratic president and a Congress controlled by Democrats in 2009 when lawmakers were debating Obamacare, pharmaceutical companies were able to dodge Medicare price negotiation, partly by agreeing to commit $80 billion to help fund the health law.

Trump shocked the industry at his Jan. 12 news conference, when he said that “pharma has a lot of lobbyists and a lot of power and there is very little bidding. We’re the largest buyer of drugs in the world and yet we don’t bid properly and we’re going to save billions of dollars.” He also said the industry was “getting away with murder.” After his remarks, the Nasdaq Biotechnology Index and the Standard & Poor’s 500 Pharmaceuticals, Biotechnology & Life Sciences Index both fell by the most in about three months.

Unclear support

It’s not clear that Trump has the support of key Republicans for the harshest drug price policies, which have typically been opposed by conservatives. The new chairman of the largest bloc of House conservatives said last week that he has “concerns” over Trump’s stated plans to bargain with pharmaceutical companies over Medicare drug prices.

“I would be cautious in affirming that is the best approach to take,” said Republican Study Committee Chairman Mark Walker of North Carolina, in a meeting with a group of reporters. The RSC had about 170 members last session — and its leaders expect to announce their membership number for this session in early March.

Trump’s own nominee to run the Department of Health and Human Services, Tom Price, wouldn’t commit to bidding last week when asked about the topic at a Senate Finance hearing on his nomination.

Drug prices

“We’re committed to making certain that drug prices are able to be afforded by individuals,” Price told senators at the hearing. The size of the savings negotiation could produce for taxpayers is the subject of fierce debate ranging from modest to as much as $16 billion a year.

Pharmaceutical companies’ approach is a far cry from the auto industry, which scrambled to appease Trump after he spent months criticizing carmakers for adding jobs overseas. Ford Motor Co., for example, canceled a $1.6 billion car assembly plant in Mexico and said it will instead spend $700 million to expand a Michigan factory. The chief executive officers of major auto companies including Ford and General Motors Co. met with Trump on last week to discuss incentives the president plans to offer to maximize jobs at home.

Pharmaceutical companies are pushing Congress to ease certain laws so the industry can more easily enter contracts with health insurers that pay for drugs based on how well they work, Cohen said. An example of such contracts is one Swiss pharma giant Novartis AG has in place for the heart failure treatment Entresto, in which insurers pay more if the drug keeps patients out of the hospital and lowers associated costs.

‘Soul searching’

“These ideas have come out of a huge amount of soul searching and study and internal discussions among hundreds of CEOs and senior executives at biopharmaceutical organizations,” Cohen said.

Rep. Walker indicated he isn’t comfortable with Trump being personally involved in specific policy proposals that could become part of a plan to repeal and replace Obamacare. At a briefing last week, Trump’s press secretary, Sean Spicer, said that lowering drug prices is going to be one of the key parts of reforming health care.

“I would have some concerns as far as the commander-in-chief beginning to negotiate all these different aspects of it,” Walker said.

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