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Executive power

Executive agencies, not Congress, will be pharma's greatest threats in Washington

Years of congressional gridlock have caused power in Washington to shift to the White House, making the levers of power less accessible to pharmaceutical industry lobbyists. While Congress will continue to mine outrage over drug pricing for headlines, the most potent attacks on drug pricing models will be launched from executive agencies, regardless of who is elected president.

Provisions in the Affordable Care Act (ACA) released many of the constraints Congress had imposed on CMS's ability to adopt new reimbursement policies. President Barack Obama will hand his successor new legal authorities and precedents for using the bureaucracy to implement policies that have traditionally been the purview of Congress, as well as an extensive list of policy prescriptions for applying administrative remedies to reduce drug prices and spending.

Many of these proposals were crafted by individuals who are advising the Clinton campaign and are short-listed for senior positions in a Clinton administration (see "Who's on the Bench," page 5).

The assertion of presidential authority also could lead the next president to appoint officials, including at FDA and NIH, who are willing to add cost-cutting to their agencies' traditional missions.

An increased reliance on executive power is especially likely if Republicans retain control of the House and Democrats gain a majority in the Senate, perpetuating the legislative stalemate that has characterized most of Obama's tenure.

The shift of drug price policy-making from Congress to executive agencies presents challenges for drug companies and the trade associations that for decades have deflected political attacks on pricing and profits. The billions of dollars the industry has spent on lobbying and campaign contributions over the past decade, along with substantial investments in shaping the opinions of influential elites, have been focused on legislators, not cabinet members and civil servants.

The executive branch is less susceptible to the kind of pressure pharma companies can apply. As the nation's largest purchaser of drugs and medical services, it also is motivated to adopt an adversarial stance to the industry.

Industry and individual companies may try to respond by working with the next administration to craft pricing and purchasing practices, such as outcomes-based payment models, that are more acceptable to policy-makers and the public.

Drug companies also are likely to form tactical alliances with physicians, patient groups and other groups to try to persuade Congress to block specific administration actions. The coming fight over CMS's plans to change the formula for add-on payments for Part B drugs will be a test of this strategy.

Demonstration powers

Provisions of the ACA that transfer power from Congress to executive agencies were written specifically to evade the ability of drug companies, payers, patients, physicians and hospitals to influence legislators. These include the Center for Medicare & Medicaid Innovation (CMMI) at CMS and the Independent Payment Advisory Board

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