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INFLECTION POINT: Yeah, We Probably Have to Talk About Tariffs
While everyone else celebrated the asterisk-filled “pause” on reciprocal tariffs yesterday (including biopharma investors!), the media stayed focused on the pharma tariffs that are assumed to be in the offing.
There are really two sides of the pharma-tariff discussion.
One has to do with generic medicines, and it’s pretty straightforward. The best case is that the price increases are passed directly into the supply chain, eventually reaching the patient. That’s bad, but (maybe?) better than the alternative case of generic company just saying “screw it” and abandoning drugs with eroding margins.
So all bad news there, and it probably explains why Democrats are banging pots and pans together to keep attention on the supply chain.
The other side has to do with branded meds, and the calculus here is tougher. Margins on brand-name products are not nearly as slim as those on generic drugs, so there’s less risk of companies just quitting, but the system really doesn’t have a lot of experience with exogenous pricing shocks.
That shows up in the coverage. This ABC News piece might be the best article trying to paw through it, though the story kind of whipsaws between wildly divergent scenarios.
There is the idea that pharmaceutical companies will be able to pass along the tariffs to insurers, who would then allocate the $600-per-household increase (the insurer, maybe, would eat some; premiums would go up, cost-sharing would increase, etc.).
And there is the competing idea that companies wouldn’t be able to pass along the price increases, in which care — per USC’s William Padula — the most logical way to paper over the increase in prices would be decreased spending elsewhere.
Like, um, R&D: “If they have less research and development money because fewer people are buying drugs that are priced higher as a result of tariffs then, over the long run, they’re going to have to withdraw investments in research and development that could lead to fewer innovations.”
To be clear: All of this is what-if built upon what-if, and I don’t like writing about it.
I don’t intend to file breathless updates every day on the state of the tariff threats/rumors, but I’ll do my best to share thoughtful takes on economic-impact spitballing as I see ‘em.
THE ARC/ Reviewing Novo’s Day in IRA Court
So I went back and reviewed the oral argument in Novo Nordisk’s IRA appeal.
My favorite part was a little back and forth about whether forcing companies to acknowledge a “maximum fair price” was a little like forcing New Hampshire residents to drive around with “Live Free or Die” on the license plates. (The Supreme Court said that’s illegal back in the 1970s.)
I don’t think that’s the most important part of the argument, but I’ve always gotten a kick out of how hard the NH state motto goes, so it was my favorite part.
It’s a fool’s errand to try to divine how a court is leaning by the questions it asked (especially for a legal dilettante like me), so don’t take any of this to the bank. Some of this may be devil’s advocacy or legal sparring.
There’s this question about how closely CMS implementation tracked with the law itself:
And here’s a judge trying to make sense of what makes one drug different from another (even if they have the same ingredient):
But there’s some suggestion that the law itself had some signals that implementation questions don’t belong in a courtroom.
As always, no legal handicapping here. Just a reflection on what went down.
If you want a rough transcript of the argument, shoot me an email.
QUICK TURNS/ More on ICER and Obesity, Along with a 340B Rumor
I was pretty snarky yesterday about ICER’s approach to obesity-med affordability, papering over some of the real dilemmas that come with that discussion. ICER’s Sarah Emond does a good job of detailing the trap that those drugs create in this Formulary Watch piece.
Sally Greenberg from the National Consumers League wraps up a broad swath of the pro-340B-reform argument in a tight little package in this Real Clear op-ed. Nothing new for you folks, no doubt, but I’m always impressed when someone fits 10 pounds of 340B fun into a 5-pound bag.
340B Report is suggesting that oversight for 340B, which now rests with HRSA, might move to CMS. The sourcing here is particularly sketchy — unnamed sources citing “rumors,” which is at least two degrees of separation from reality — but the rumor mill seems to be somewhat consistent here in predicting the move.
Header image via quotecatalog.com
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To learn more about how Reid Strategic can help you, email Brian Reid at brian@reidstrategic.com.
