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Personnel is policy: Did Trump move on insulin prices because of a key staff departure?

by Resurgent Insider Read Profile arrow_right_alt

On Tuesday, President Trump announced a new policy under which seniors on insulin will see their Medicare insulin costs capped at $35 per month.

Largely, the event was noticed because of Trump’s odd “should I be [on insulin]?” remarks, which resulted in the usual jeering and mockery on Twitter.

But it should have been noticed because of its substance. Via industry publication Fierce Pharma:

At a Rose Garden event Tuesday, Trump unveiled a new Senior Savings Model for insulin, which will allow seniors access to new savings through insurance plans that will become available through open enrollment this fall. The program, which is the result of negotiations between pharma companies, insurers and others, will cap Medicare insulin costs at $35 per month, the president said. 

Still, the program doesn’t go as far as the administration’s prior drug pricing promises, and Trump is pushing lawmakers to deliver other measures via legislation yet this year, Sen. Chuck Grassley said in a recent radio interview.

For years, seniors have faced uncertainty on insulin costs due to Medicare’s various coverage phase—particularly the “donut hole” coverage gap between routine spending caps and catastrophic benefits. Aside from providing cost certainty, the new program will bring savings of $446 per patient per year on average, according to the president’s Tuesday remarks. 

Trump described the program as a “powerful action to lower healthcare costs for America’s seniors” at Tuesday’s event.

In addition, the insulin announcement, which will put a dent in Big Pharma’s profits, was noteworthy because it comes exactly as a very powerful and key Pharma ally in the administration is exiting.

That aide is Joe Grogan, director of the United States Domestic Policy Council and a former top lobbyist for drug giant Gilead.

While Trump has routinely mooted and advocated tough measures to rein drug prices in, with Grogan in a position to advance or veto drug pricing measures with a single signature, Trump’s drug pricing blueprint magically wound up looking a lot like Big Pharma’s stated wishlist.

But Grogan’s government paycheck runs out at the end of the month, and word on the street earlier in May was that he would effectively exit sometime around the 24th.

Grogan having one foot out the door probably played a role in Trump rolling out his insulin initiative when he did– or perhaps, the fact that the insulin initiative was coming helped prompt Grogan to move towards the nearest exit.

Some of Trump’s drug pricing ideas that Grogan seems to have shut down may have been objectionable on the basis of free market principles. For example, had the President pursued harsh, direct price controls, that would have been obviously anti-free-market and objectionable to conservatives.

However, in other instances, with “every regulation change the administration wants to make” “ha[ving] to get past Grogan’s desk,” it looks a lot more like Grogan was continuing to do his former employer’s bidding.

This was true with regard to a rule change to the Gilead-hated 340B drug discount program on which many many Trump voters rely (those voters would have been adversely impacted by the change; Gilead and other Big Pharma companies hate the program because they feel it cuts into their profits; zero taxpayer funding is involved).

Grogan was also pegged as being behind a proposal to “extend[ing] the patent life of drugs in foreign markets to ‘provide for protection and enforcement of intellectual property rights.'”

This was purportedly designed to ensure “that American consumers do not unfairly subsidize research and development for people throughout the globe.”

But in practice, it looked like a way of boosting Big Pharma’s profits derived from abroad without forcing drug pricing reductions by a single cent domestically.

Either way, that policy change is one favored by drugmakers and rarely pointed to as a clear path to reducing drug prices domestically by experts focused on drug pricing policy. Hypothetically, if drug prices went up elsewhere, Pharma companies could justify cuts to prices in the US. But would they cut them in any meaningful way? Skepticism abounds.

With Grogan gone, and Trump heading into a difficult re-election campaign, the probability is we will see more announcements in the vein of this week’s insulin one– and possibly the unveiling of more policy consistent with Trump’s 2016 anti-Big Pharma rhetoric, as opposed to Grogan’s more pro-Pharma bullet points.

While Grogan may have continued to harbor pro-Pharma sympathies, Trump never has maintained them. Just as importantly, the President knows his base largely reviles the companies and feels that their wallets are raided by them.

Change is afoot. The question is whether it will make a real electoral difference.

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