WASHINGTON — The conservative health policy minds asked to gather at the White House on July 12 were not there to celebrate a legislative victory or to strategize.
Instead, the who’s-who list of Republican-leaning advocates received a head-turning admonishment from a key White House aide who told them, in no uncertain terms, to get in line with President Trump.
“The president will not be outflanked on the left on drug prices,” said Joe Grogan, the White House’s top policy aide, according to four sources familiar with his remarks, two of whom were present. The Trump administration, a frustrated Grogan warned, would not allow Democrats to dominate drug pricing discussions in Washington.
The rare rebuke highlighted a fundamental roadblock for Trump’s efforts to reform the pharmaceutical industry: Conservative groups have flooded the airwaves and social media to oppose his last, best hope to lower drug prices. And in a strange-bedfellows twist that has only fueled conservative angst, it is progressive presidential candidates, led by Bernie Sanders, who have most vocally supported the idea: using prices in foreign countries to cap U.S. payments for costly treatments.
The White House and several progressive candidates have lamented that drugs often cost far less overseas than in the U.S., and Trump has railed frequently against “global freeloading.” Though the foreign price caps are currently the administration’s last drug pricing idea standing — following a policy reversal and a loss in federal court — the “America First” language has not swayed most conservative groups.
“It’s a very interesting dynamic, in that the Republican Party, from a philosophical standpoint, has generally favored free markets,” said Katie Mahoney, the vice president for health policy at the U.S. Chamber of Commerce. “So it is somewhat strange that a conservative administration is putting out proposals that seem to have a tinge of socialist background.”
The most inflammatory ad takes a classic approach: It features Trump’s grinning face alongside that of Sen. Bernie Sanders (I-Vt.), the left-wing presidential candidate who supports foreign-derived price caps.
“Don’t be a Bernie Bro, Protect Medicare Part B,” the text of the ad implores voters.
It was paid for by Americans for Tax Reform, a group helmed by the anti-taxation activist Grover Norquist, that has applauded the sweeping corporate tax cuts a GOP-controlled Congress pushed through in late 2017 at the Trump administration’s urging.
A separate campaign from Freedomworks, a limited-government advocacy group, pulls no punches in criticizing Trump and his health secretary, Alex Azar, for the international price index proposal. In targeted Facebook (FB) ads, the group places Republican senators alongside Azar and urges them to reject “socialist drug prices.”
The American Conservative Union, another right-wing advocacy group generally supportive of Trump, has taken a similar tack. In newspaper ads and a temporary website, the organization has called the price index “directly out of the Bernie Sanders and Hillary Clinton government health care takeover playbook.”
The widespread conservative opposition comes from a variety of Washington groups normally aligned with the Trump administration on policy issues ranging from Obamacare repeal to corporate tax cuts. But the plan to cap U.S. drug payments based on international prices, they say, simply goes too far.
At a recent and widely attended Capitol Hill briefing, representatives from the industry trade group BIO and the U.S. Chamber of Commerce — the country’s largest lobbying organization — cast the policy as an existential threat to American biotech.
“You can’t look at a constellation of other countries that do not have market-oriented systems and use their drug pricing policies as a basis for establishing your own system of price controls and claim it is market-based,” said Grace-Marie Turner, president of the Galen Institute, a conservative policy research organization. “It just doesn’t make any sense to us.”
“We support the administration on a great number of other things they’re doing,” added Turner, who confirmed she attended the July 12 meeting but, when asked, said she did not recall Grogan’s remarks. “But we cannot support this provision.”
Forty-two conservative and business groups, including Turner’s, signed a letter in November opposing the proposal, arguing it would suppress innovation and restrict patient access.
One damning assessment of international price indexes, bizarrely, came from the Trump administration itself.
In the administration’s highly touted drug pricing “blueprint,” issued in May 2018, the White House wrote that price references poses the threat of a “market lockout” and “delaying the availability of new cures to patients living in countries implementing these policies.”
Complicating matters further: The proposal now enjoys support from many among the horde of Democratic presidential candidates running to unseat Trump. Sanders, the Democratic socialist candidate largely reviled by the right, introduced a bill last year and again in January that largely mirrors the Trump proposal. Other Democratic candidates, like Sens. Elizabeth Warren, Kamala Harris, Cory Booker, Amy Klobuchar, and Kirsten Gillibrand, have since signed on.
Many industry antagonists see a more simple explanation for the conservative campaigns: money.
The Chamber of Commerce represents numerous pharmaceutical manufacturers and industry trade groups; executives from Bayer (BAYRY), Pfizer (PFE), and Celgene (CELG) sit on the association’s board. PhRMA has also funded many of the groups most staunchly opposed to the foreign-derived price caps.
The American Conservative Union received a $150,000 cash grant from PhRMA in 2017, according to an Internal Revenue Service disclosure. A recent lobbying disclosure filed by ACU lists only one topic of discussion with lawmakers and aides in the House of Representatives: drug pricing.
PhRMA also gave generously in 2017 to other organizations present at the White House “listening session,” which was also attended by health secretary Alex Azar: $75,000 to the Galen Institute and $500,000 to the Coalition for Affordable Health Coverage, which represents health industry stakeholders including drug companies.
The groups that targeted Trump, and GOP senators, largely did not respond to STAT’s requests for comment about their advocacy strategy. Americans for Tax Reform said in a statement: “We think the ad speaks for itself.”
“We argue and advance issues based on the policy, and not the political affiliation of the administration or the Congress that’s doing it,” said Mahoney, the Chamber of Commerce health policy expert. “Our goal and our job is to advance the best policy that we can, and try to push back on bad policy.”
The pushback, broadly, appears to be working — not with the Trump administration, perhaps, but certainly with Republicans on Capitol Hill.
Republicans, largely reluctant to oppose Trump even in almost any arena, have nonetheless felt free to rebuke their party’s leader on one of his signature ideas. Sen. Pat Toomey (R-Pa.), at a recent committee markup, even attempted to explicitly “prohibit” Trump’s proposal as part of a sweeping package to lower drug prices.
Toomey’s amendment failed in a dramatic 14-14 vote before the Senate Finance Committee. But even Sen. Bill Cassidy (R-La.), once a supporter of international price references, sided with the Republicans, who almost unanimously voted to void a key priority for a GOP White House.
Among Cassidy’s reasons, as he told reporters last week: He had met with representatives from the pharmaceutical industry, and their “better ideas” had won the day.