Healthcare Policy Update from D.C.: Drug Pricing Reform, Vaccine Delivery, and Hospital Funding

By Dr. Brian Abrahams
Published July 24, 2020 | 2 min read

RBC's Dr. Brian Abrahams reveals the latest views from D.C. on policy developments related to healthcare, including drug pricing, vaccines, hospitals, and the potential ramifications of the Presidential and Congressional election outcomes on the space.

With the 2020 election looming, what is at stake for the healthcare sector in the second half of 2020 and beyond? We had an opportunity to speak with a healthcare policy expert to get the latest views from D.C. on expected areas of focus into and through the election, including drug pricing, vaccine delivery, and hospital funding. RBC’s Brian Abrahams, our Co-Head of Biotechnology Research, along with his colleagues on the Healthcare and U.S. Equity Strategy teams, details these healthcare policy expectations in his report "Healthcare Policy Update: Drug Pricing Back Seat into Election, Senate Flip Key, More Action In '21", published on July 17, 2020.


Disclosures and Disclaimers


Drug Pricing – A Wild Card for the 2020 Election?

On July 24, President Trump disclosed four Executive Orders (EOs) on drug pricing topics that have long been discussed by the Trump Administration. The methods by which the EOs propose to lower prescription drug prices include: insulin and EpiPen cost reduction, drug re-importation, bypassing pharmacy benefit managers to deliver prescription discounts directly to patients, and introduction of a “favored nations” policy. However, actual implementation of these EOs would be challenging. It is more likely that the EOs are intended to provide campaign talking points rather than producing tangible, material effects.

In comparison to the Obama and Trump presidencies, our sense is that Biden is more deferential to Congress, and would likely be more focused on improving direct negotiation for drug costs within public plans.

"We believe [the executive orders] are likely geared more towards deriving campaign talking points rather than producing tangible, material effects."

– Dr. Brian Abrahams, as quoted in the NYT

 

Political Push for Vaccine Delivery

The current administration continues to have significant focus on COVID-19 vaccine development and accelerating timelines for vaccine delivery in October of 2020. While a first delivery this fall appears unlikely due to concerns around clinical trials, public safety, and distribution capabilities, our healthcare policy expert believes that approval and delivery of vaccines around January 2021 is a more likely scenario.

In terms of additional funding to further support the development and manufacturing of vaccines, we may see a pickup in funding: potentially 3 to 5 grants from BARDA in the illustrative size of the OWS funding for NVAX ($1.6B), disbursed sooner rather than later given the urgency.

 

Hospital Funding in Good Standing

The political backdrop in D.C. for the hospital sector is very accommodating across political party lines. Given the devastating financial impact of forced census drops, and the halt on elective surgical procedures caused by the initial COVID-19 shut down, the industry has immense political goodwill to help the industry. Hospitals have been one of the top recipients of Federal assistance, and this is unlikely to change for the foreseeable future. Looking forward to the second half 2020 and into 2021, additional federal assistance is likely in the form of both grants and loans.

Overall, we continue to see the healthcare sector favorably, with perhaps limited downside to either presidential outcome, and we continue believe the sector will perform well heading into the back half of the year.

Dr. Brian Abrahams authored the research report "Healthcare Policy Update: Drug Pricing Back Seat into Election, Senate Flip Key, More Action in '21" on July 17, 2020. For more information about the full report, please contact your RBC sales representative.


Dr. Brian Abrahams

Dr. Brian Abrahams
Co-Head of Biotechnology Research


BiotechnologyCOVID-19CoronavirusHealthcare