What Does Trump’s 6 Point Healthcare Plan Actually Mean for the Industry?

What have we seen so far?    

In reality, we won’t be able to see the true effects of the election until after new policies are finalized and implemented, most likely in early 2018. What we can see are the initial reactions of people and groups in the industry.

After a recent post-election poll, which indicated healthcare is top of mind for the most Americans in regards to Trump’s first 100 days in office, many invested parties have been bracing themselves for the changes to come. One group that will be heavily affected is the FDA.

FDA Impact – Trump’s position on government regulation is no secret. As it relates to healthcare, he claims that excessive interference from government hinders innovation and hurts the economy. Part of the President-Elect’s 100 day plan is to “cut the red tape at the FDA.” He explains “there are over 4,000 drugs awaiting approval, and we especially want to speed the approval of life-saving medications.”

Cutting the red tape at the FDA won’t be as easy as outlining it in a proposal. Regulations exist to keep dangerous devices and drugs off the market. Under current FDA guidelines, many drugs and devices are still recalled because of unexpected outcomes; creating more lenient regulations could make new products unpredictable. Finding the balance between risk and innovation is going to be a challenge for Trump and the new Administration.

With Trump’s promise to speed up the process of getting new products to market, by easing regulations, some FDA initiatives are already being re-prioritized. Multiple sources in Washington, DC, have confirmed that the FDA is placing draft guidance for regulating lab-developed tests on hold.

“The FDA believes that patients and healthcare providers need accurate, reliable, and clinically valid tests to make good healthcare decisions — inaccurate or false test results can harm individual patients,” said a FDA spokesperson to GenomeWeb. “We have been working to develop a new oversight policy for laboratory developed tests, one that balances patient protection with continued access and innovation, and realize just how important it is that we continue to work with stakeholders, our new Administration, and Congress to get our approach right. We plan to outline our view of an appropriate risk-based approach in the near future. It is our hope that such an approach will help guide continued discussions.”

Patient-Centered Healthcare – The FDA is realigning their strategies to focus on the patient-centered shift in the life science industry. This shift started before the election, and last year the FDA announced their first ever Patient Engagement Advisory Committee. This movement is more prominent than ever, as Trump’s proposal brings a spotlight to patient-centricity.

Trump plans to achieve a patient-focused healthcare system by repealing and replacing the Obamacare Act with Health Savings Accounts, the ability to purchase health insurance across state lines, and letting states manage Medicaid funds. This plan is still very vague, and it has critics and supporters alike in a state of uncertainty.

President-Elect Trump “creates tremendous uncertainty about the future of healthcare,” said Jonathan Oberlander, a professor of health policy at UNC Chapel Hill to the News & Observer. “Obamacare is in tremendous peril. There’s a lot of uncertainty about what plan (he) would push. … I don’t think we can go back to status quo. Too much has changed.” Millions of people are insured because of the ACA, and repealing it has many people worried about losing their coverage. Especially now, with Trump’s choice of Tom Price, longtime Obamacare Critic, for Health Secretary.

However, there are people who are saying President-Elect Trump’s plan is a move in the right direction to lower insurance rates and deductibles. Supporters of Paul Ryan’s “A Better Way” plan, which he claims focuses on quality over quantity, are especially optimistic. A lot of Paul Ryan’s plan aligns with Trump’s position.  However, the details of which route Trump will pursue has yet to be determined, and everyone awaits to see what exactly will replace the ACA.

One aspect that Trump has publically agreed upon is Paul Ryan’s proposal to allow insurers to sell their policies across state lines. “What I’d like to see is a private system without the artificial lines around every state,” Trump said. “I have a big company with thousands and thousands of employees. And if I’m negotiating in New York or in New Jersey or in California, I have like one bidder. Nobody can bid.”

The practicality of selling health insurance across state lines has been heavily debated. Critics worry that insurers will just go to the state that has the most lenient regulations, which could be dangerous for patients. It is also argued that “the barriers to entry are not truly regulatory, they are financial and they are network,” said Sabrina Corlette, the director of the Georgetown University Health Policy Institute. Selling insurance in a new state relies upon relationships with doctors and hospitals. If health insurance can be sold across state lines, patients may have a harder time finding doctors in their network.

Biotechnology – A facet of healthcare that has been affected by Trump’s election is the biotechnology sector. Many companies saw their stocks rise considerably the Wednesday after the election. The iShares Nasdaq Biotechnology ETF (IBB) increased almost 9%, Amgen followed with more than 8%, Allergan also saw a 8% rise, Pfizer had a 7% gain, and Mylan had a 4.8% increase.

This rise is due to the drug pricing pressures Hillary Clinton’s campaign promises would have inevitably brought. With President-Elect Trump’s surprising victory, those worries were alleviated. However, this relief may not last long.

There are mixed opinions on whether the funding of life sciences research will be impacted by the election. “The biotechnology industry is anxious about the likelihood of a brain drain, and this is of great concern,” said Mary Ann Liebert, founder and CEO of GEN, a biotechnology publication. “A plurality of respondents say they believe that foreign-born scientists who have been educated in the U.S. will be more likely to leave during a Trump presidency.”

What’s Coming Next?

Merger & Acquisitions – The details of Trump’s plan provide an interesting vision into the future of healthcare for the next four years. One area that will quickly see change is M&A. With  Trump’s decision to replace Loretta E. Lynch as Attorney General with conservative Republican Senator Jeff Sessions, it is likely there will be less government regulation of business. This will affect how the government handles the merger between Anthem and Cigna, currently on trial, and the merger of Aetna and Humana, heading to trial soon.

Current Attorney General, Lynch, argues that “If these mergers were to take place, the competition among insurers that has pushed them to provide lower premiums, higher-quality care, and better benefits would be eliminated.” While the companies claim that it would be in the consumers best interest because bigger companies can make better deals with doctors and hospitals and lower healthcare costs as a result.

The effect of the election will not immediately impact the decision of the court decision, but it could be of significance if the companies appeal the decision after Trump takes office in January.

Beyond these two upcoming court cases, the movement toward less government regulation in business will likely change how mergers and acquisitions in the medical industry will play out, as well as how products are brought to the market.

There are a lot of questions up in the air about the future of healthcare. All that can be concluded for sure is that change is coming. To stay up to date on new rules, regulations and policies under the new administration, medical industry leaders can gather at conferences or join our mailing list for regular updates.