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Although virtually no one in the urban bubble where biopharmaceutical companies reside expected it to happen, Donald Trump won. So, now what?

On Wall Street, it looks like the industry won, as pharma and bio stocks took a quick upward turn the day after the election and have held that bump so far. That relief rally happened presumably in response to the fact that candidate Hillary Clinton, who vowed to decrease drug prices, would not be in charge of the White House. Furthermore, leading Democratic critics of drug ads and prices, including Congresswoman DeLauro and Senators Franken and Sanders, will not have the majority privilege of setting congressional hearings, nor occupy the high bully pulpits reserved for the majority party. These factors seem to elevate the long-diminished prices on biopharma stocks that had taken hold since the election season began in earnest.

Indeed, as Coalition for Healthcare Communication Board Chair Sharon Callahan, CEO, TBWA/WorldHealth, said at the recent Coalition D.C, member meeting, “I expected us to continue our focus on the drug pricing issue, but the one candidate who didn’t say much about drug pricing will be the president of the United States. Maybe we can use this lack of noise to get our message [about value] out there – take a lesson from Trump and sell our brand.” Accordingly, the Coalition and its PhRMA, BIO and AdvaMed allies will be repeating the value message in the months to come.

However, the Trump victory may not be so clear for our industries. While the pollsters missed the close election, the polls are not close on drug prices. Republicans and Democrats think prices are too high and favor government intervention. Will Wall Street’s newly found favor for biopharma stocks prevail? We shall see.

Consider what could be a decidedly mixed industry result on Obamacare. Repealing and replacing Obamacare is certain to be a priority, but while it’s easy to say, it will be much harder to do. If the new scheme reduces the number of insured, it will mean fewer scripts. Further, candidate Trump, contrary to Republican orthodoxy, favored direct negotiation of government drug purchases and re-importation of cheaper drugs from abroad. And, even closer to home for the CHC and our 4As partners, likely legislation to reform the tax code will renew calls to reduce the tax deductibility of direct-to-consumer (DTC) advertising and, perhaps, all marketing. Remember, criticism of DTC is a bipartisan sport and polls reflect citizen distaste for DTC advertising as well as high drug prices.

Meanwhile, here are three areas where action affecting our industry is most likely:

1. Taxes, especially the deductibility of marketing costs: Both Trump and leading Republicans campaigned on the need for corporate and individual tax reform, and Trump endorsed the House “Blueprint on Tax Reform” that includes a re-examination of all deductions. The threat comes in two forms, elimination of the deduction for drug advertising designed to raise money and reduce drug utilization, and elimination of all deductions for marketing costs. Legislation affecting drug advertising only would face immediate First Amendment challenges that certainly will slow and maybe kill such legislation. But, broader legislation applied to all marketing of goods and services and intended solely to raise revenue is not barred by the First Amendment. Broad marketing deductibility legislation is by far the most dangerous to agencies and publishers because it would be paired with a significant overall tax reduction that could be supported by all advertisers, including biopharma clients.

2. Regulation: Likewise, the President-elect and congressional Republicans agree that reducing government regulation will be a major priority. In fact, candidate Trump wanted to see “reform of the FDA,” calling out regulation of human and pet food. But reform efforts at the FDA, especially in the areas of  drugs and biologics, could well be problematic. Mike McCaughan of Prevision Policy put a fine point on this at the recent Coalition meeting, noting that the drug approval program is currently working at historically high levels, probably approaching the peak of efficiency and productivity. Any “reform” could impede that productivity, not increase it.

Besides, the passage of the 21st Century Cures Bill during the lame duck session of Congress includes major medical reform provisions that will likely speed innovation and drug approvals. Any tinkering of those provisions by a Trump-led FDA might well be counterproductive.

In any case, don’t expect much deregulation of drug marketing at the behest of the FDA’s Office of Prescription Drug Promotion (OPDP). One area to watch is the regulation of sponsor communication of off-label use of drugs, the subject of a string of court decisions undermining the FDA’s current ban on such communication and the subject of a high-profile, two-day post-election hearing. Expect some movement by FDA, especially enabling more communication with the payer community; any deregulation in this area will be careful and slow. Indeed, the industry itself is seeking incremental, rather than dramatic, change in its off-label communication practices.

Still, deregulation at the behest of the Trump White House is likely to show up in other areas. Two Obama administration rules quickly come to mind, i.e., aggressive overtime rules increasing personnel costs for many small businesses, including agencies and publishers, and new privacy regulations from the Federal Communications Commission requiring opt-in for behavioral advertising. The overtime rules were suspended recently by a Texas court, enabling time for a Trump Department of Labor review, and a new Republican majority at the FCC likely will review the privacy regulation.

3. Supreme Court: The Coalition has taken the First Amendment right of medical manufacturers as a first principle. Although the Supreme Court over the past 35 years has strongly supported commercial speech, recently many of those cases have been decided 5-4 with the now-deceased Justice Scalia casting a deciding vote. The Republican White House and Senate are more likely to appoint and confirm a Justice that supports commercial speech rights. This could have a substantial effect on FDA, particularly on the off-label issue. Moreover, other FDA regulations could fall under exacting First Amendment scrutiny.

So, while we know some things to expect from the Trump Administration, like the man himself, many more things remain to be seen. Stay tuned, and we’ll keep you up to date.