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Has Trump been good for medical marketing?

Written by: | JKamp@wileyrein.com | Dated: Wednesday, June 6th, 2018

 

John Kamp is Executive Director of the Coalition for Healthcare Communication 

While many of us from blue states and urban bubbles fret over some of the actions of President Donald Trump, it’s good to take a clear-eyed view of whether or not Trump and this administration has been good for the medical marketing industries. Moreover, it’s useful to consider how a “blue wave” in the midterm elections might change the dynamic.

So far, the record of success is mixed, especially when considering the political agenda of the president and the Republican majority leaders in Congress, Sen. Mitch McConnell (R-KY) and Rep. Paul Ryan (R-WI). Consider the big four plans by last year’s political winners: (1)Healthcare reform; (2) Tax reform; (3) Infrastructure; and (4) Regulatory reform.

Healthcare reform ate up much of the critical early months of the administration; from a Republican political perspective it was a colossal failure. However, for medical companies and their allies, especially the biopharmaceutical and device industries, failure to kill Obamacare was a victory. It preserved the insurance and other financial support for millions of citizens, keeping them as customers for their products and services.

Tax reform was a political victory for the Republicans, and offered a financial boost for medical companies. Understand that reducing the tax rate for industry led to an immediate bottom-line bonanza for many. Also, large multinationals will benefit from the virtual tax holiday on repatriation of foreign profits.

Medical marketing companies also won a huge victory when Congress refused to adopt a plan to reduce the tax deductibility of advertising and all other marketing expenses. According to a Congressional Budget Office estimate, maintaining the current practice of immediately and completely deducting those expenses saved marketers and their clients $169 billion dollars.

Again, that’s billions of dollars of tax savings. Even in Washington, that’s real money. Thanks to those of you who wrote letters and e-mails and made calls to members of Congress to preserve that tax incentive to market.

Although the repeal of Obamacare died a painful death, the planned infrastructure bill has so far been delayed, at least beyond this session of Congress.

Meanwhile, regulatory reform has been mostly a relief for the medicines industries. Early White House proposals for scary, sweeping changes to FDA processes and procedures have been scaled down considerably by the steady hand of FDA Commissioner Scott Gottlieb and the more recent arrival of Alex Azar as Secretary of the Department of Health and Human Services.

Sure, Trump, Gottlieb, and Azar have sought to clip branded industry profits by increasing generic competition and other drug price-reduction proposals. Still, campaign promises by Trump to enable drug imports and increased government negotiations have so far not surfaced. Indeed, drug stock prices went up after the recent White House press conference on drug prices.

However, one decidedly bad proposal did come out during that press conference, i.e., to evaluate compelling drug companies to list drug prices in all consumer ads. While lowering prices is an incredibly popular idea among citizens, mandating further disclosures in ads would do more to confuse and scare patients and caregivers than to enlighten them.

As those of you who follow our posts on the Coalition website, cohealthcom.org, know well, I believe that not only are forced price disclosures a bad public policy idea, they are also likely to fail under judicial scrutiny. FDA’s jurisdiction under current legislation is doubtful, and as “compelled speech” under the First Amendment, courts are likely to find FDA implementation unconstitutional.

But, as a practical matter, for now the idea is likely to derail the FDA’s current likelihood of reforming the existing disclosure rules for DTC and other marketing. Let’s hope that the FDA’s working group studying the idea of including prices in ads quickly and decisively rejects it.

That’s the current state of the industry under the Trump administration. What happens if a big blue wave washes over the House of Representatives or even the Senate in the upcoming midterm elections?

Consider just two ideas popular in Democratic circles in Congress. First, Rep. Rosa DeLauro (D-CT) has often championed the idea of a three-year moratorium on advertising immediately after a drug is approved. Predicated on the idea that new drugs are inherently dangerous and need to be introduced gradually to protect against widespread and hidden dangers early after adoption, the proposal may not be found a violation of the First Amendment. However, it would certainly chill launch campaigns and effectively shorten the patent protection period for branded drugs.

Second, remember former Sen. Al Franken’s (D-MN) idea to eliminate the tax deduction for advertising and other marketing? This idea is now being championed by Sen. Claire McCaskill (D-MO), who calls the deduction an “outrageous subsidy” for the drug industry and has garnered several Democratic co-sponsors for her bill.

Moderates and liberals among us must be careful what we wish for.

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