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ACA repeal failure may weaken Trump's drug cost reform efforts

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ACA repeal failure may weaken Trump's drug cost reform efforts

The failed effort to repeal the Affordable Care Act is raising questions for the rest of President Donald Trump's healthcare agenda, including even bipartisan issues like the rising costs of prescription drugs.

Trump's reputation as a dealmaker suffered a blow when members of his own party — the Freedom Caucus, a coalition of the most conservative lawmakers, and the Tuesday Group, an informal caucus of moderate Republicans — refused to back the House repeal-and-replace bill. It was pulled from the chamber floor by Speaker Paul Ryan, R-Wis., minutes before the legislation's March 24 scheduled vote.

The inability to muster enough votes to pass the legislation signals political weakness, said Julius Hobson Jr., a senior policy adviser at the Washington law firm Polsinelli PC.

"The fact that he met with members of the Freedom Caucus and then the more moderate Republicans and did not turn anybody is generally a bad sign," said Hobson, who has 40 years of public policy experience, including working for the American Medical Association. "There is no way to sugarcoat that."

Evercore ISI analyst Terry Haines said the breakdown of the ACA repeal effort was only a stumble and did not cause irreversible damage to Trump or the Republicans.

But in a March 27 research note, Haines also acknowledged that the jury was still out on the failure's significance and permanence.

Hobson, however, viewed the failure as more damaging for Trump and said it would impact his ability to stand up to the lobbying power of the pharmaceutical industry on drug prices.

"If you are going to take on the pharmaceutical industry, you've got to be in a real good, a real strong political position, because they do real well. And he's not," Hobson told S&P Global Market Intelligence. "I just don't see him in a position to be able to knock them back."

One key mistake Trump made was inviting the Freedom Caucus to the White House under the guise they were there to negotiate on the Republican bill, but then telling them "Take it or leave it," he said.

"Part of what the White House has to understand is our Constitution is a compromise document," Hobson said. "Our process involves compromise. You have to work with people. You can't get all of what you want, even on your side of the aisle."

Leave Trump out

The question now for lawmakers — especially Democrats — is what do they have to gain by working with Trump? said Hobson, whose wife chairs the D.C. Health Benefit Exchange Authority.

Bringing down drug costs has been a key issue for Sen. Bernie Sanders, I-Vt., and several Democrats, including Sens. Ron Wyden, D-Ore., and Claire McCaskill, D-Mo., and Reps. Elijah Cummings, D-Md., and Peter Welch, D-Vt. At least three Republican senators — Charles Grassley of Iowa, John McCain of Arizona and Susan Collins of Maine, on board with Democrats — also have made it a priority.

Given the drug prices issue has gained bipartisan support, Hobson urged lawmakers to go it alone before bringing Trump into the legislative process.

Members of Congress must grasp the specific policies they want to address in drug pricing legislation, build a consensus around those on both sides of the aisle and "keep the political noise down," he said.

"They have to be able to do this on their own without the White House getting in the middle of it," Hobson said. "If they don't do that, they can just forget it."

It's complicated

But lawmakers also need to know if the Trump administration is truly committed to implementing and managing any type of drug pricing legislation, such as giving the secretary of Health and Human Services the authority to negotiate on behalf of Medicare, Hobson said.

Trump and HHS Secretary Tom Price, who told lawmakers at a March 29 House hearing the administration was working on a strategy to lower drug prices, previously have been split on that matter.

As with healthcare, Hobson said he suspects Trump may not fully comprehend how complicated drug pricing can be.

Drugmakers have lobbied hard against Congress and the government intervening in manufacturers' pricing practices, and it is unclear if a Jan. 31 meeting between Trump — who earlier this year said the industry was "getting away with murder" — and the head of the Pharmaceutical Research and Manufacturers of America, Stephen Ubl, and six company executives, changed any minds.

The tendency of some drugmakers recently has been to blame insurers and pharmacy benefit managers for the high costs of drugs.

"We don't set prices; we negotiate prices," Pfizer Inc. CEO Ian Read said during a March 23 speech at the National Press Club in Washington, D.C. "We negotiate on the value of the drug, the value to society. And the arbiters of that are the insurance companies and the payers."

Read complained that insurance companies have been designing their coverage plans to shift more of the costs of prescription drugs to patients.

He said many plans now have large co-pays and deductibles, forcing patients often to pay hundreds, if not thousands, of dollars in out-of-pocket costs up front before their medicines are covered.

"This is not good insurance," Read said. "The insurance business is in the business of taking more revenues than they pay out in premiums."