Senator Bernie Sanders raised eyebrows in 2015 when he challenged Gilead (GILD) to make HCV drugs cheaper for veterans. Sanders recently urged the government to allow Americans to import cheaper drugs from Canada. However, New Jersey Senator Cory Booker (amongst others) nixed the plan under the guise that it lacked consumer protections to ensure foreign drugs met American safety standards:
In a statement to the media after the vote, Booker's office said he supports the importation of prescription drugs but that "any plan to allow the importation of prescription medications should also include consumer protections that ensure foreign drugs meet American safety standards. I opposed an amendment put forward last night that didn't meet this test."
I reached out to Sanders' office, which said there were currently no immediate plans to reintroduce the bill. The government's ability to rein in drug prices could hang in the balance. That can only mean one thing - President Trump will likely hit back at Booker over the issue. Below are three reasons why:
Trump Has Shown Support For Importing Cheaper Drugs
During the recent presidential debates, runaway drug prices took center stage. The President has even supported the importation of cheaper drugs:
Trump has supported allowing consumers to re-import drugs from abroad, and mentioned having the Medicare health program for the elderly negotiate prices directly with pharmaceutical manufacturers. Both ideas have long been opposed by the industry and many Republicans -- including Representative Tom Price, the Georgia congressman whom he has tapped to lead the Department of Health and Human Services.
Trump made several campaign promises. In his first month as president, he has moved to implement his immigration ban. Financial markets have reached record territory on the expectation that Trump will follow through on promises to invest hundreds of billions in infrastructure and cut corporate taxes. I fully expect him to push for allowing citizens to import cheaper drugs.
It Moves The Conversation Back To Important Issues
The President's first month has been drama-filled. Everyone from the democrats to Silicon Valley have hit back over the immigration ban. Former security advisor, Michael Flynn, recently resigned over inappropriate contact/conversations with Russian officials. The Flynn saga has also led several articles on the President's cozy relationship with Russian Prime Minister Vladimir Putin, and if Russia influenced the results of the presidential election. Keeping Trump occupied with drama and minutiae could be a strategy by the Democrats.
By hitting back on Cory Booker on importing cheaper drugs, Trump could change the narrative back to the issues. Creating jobs and reducing drug prices are of paramount importance to Americans. They elected Trump because they thought he could get the job done. Pushing for the importation of cheaper drugs could be a major step towards reducing runaway drug costs.
Importing Drugs Have Bi-Partisan Support
The price-gouging debate arose because citizens complained to policymakers that drugs they had been purchasing for years had suddenly doubled, sometimes tripled in price. It prompted the Senate Special Committee on Aging to investigate Valeant (VRX), Turing Pharmaceuticals, Retrophin and Rodelis Therapeutics. Leading up to the investigation, Valeant had raised the price of 81% of its drug portfolio by an average of 66%.
The Special Committee was led by Senator Susan Collins (R-Maine) of Senator Claire McCaskill (D-Mo.). After a yearlong investigation, the Senate Special Committee released a 130-page report titled, Sudden Price Spikes In Off-Patent Prescription. I was pleasantly surprised by how clear, concise and well written it was. The report described how each of these companies acquired drugs that were off-patent, created barriers to entry and raised prices to whatever the market would bear. It made several suggestions to combat price gouging, one of which was importing drugs in order to combat major price increases.
It seems silly for a Senate Special Committee to spend a year investigating a price gouging, make a well-thought out recommendation to combat it and then have it shot down. The oddity was that Booker voted against the plan despite having crafted his image as a "Man of the people." Sanders' plan was voted down 52-46. The vote was not purely along party lines, but it might have been based on contributions from big pharma. According to sources, Booker ranks second among senators who received the largest contributions from pharmaceutical companies. Of the top 10, all but one - Joe Manchin (D-WV) - voted "no" on the plan.
Conclusion
The public appears to be attuned to every move the new President makes. When Mr. Trump hits back at Senator Booker and others who voted down Sanders' plan to import cheaper drugs, it should make for great theater. I expect a version of Sanders' plan to eventually be adopted, which could drive down VRX and shares of other suspected price gougers.
