The U.S. administration is keen to sign up more companies to drug pricing deals, and mandatory rules are on the way. But how will the midterm elections affect these and other healthcare policy issues? At RBC’s Global Healthcare Conference, Hunter Hammond and Will Humphrey of Capstone’s healthcare group offered insights on the direction of policy for the rest of the year and beyond. Key Points Mandatory Most Favored Nation pricing rules are likely to be contested in court. The FDA’s initiatives to speed drug development are signals of its modernization intent. The U.S. is more likely to use incentives than sanctions to address mass in-licensing of Chinese innovation. The current program to extend access to GLP-1s could be a template for future breakthrough drugs. Democrat gains in the midterm elections would likely limit further hospital cuts. Introductions [00:08] Host Joe Coletti introduces highlights from the U.S. Healthcare Policy Panel at RBC’s Global Healthcare Conference, featuring Hunter Hammond and Will Humphrey of Capstone’s Healthcare Group. Midterm campaigning [00:40] In the run-up to the midterms, the U.S. administration will aim to focus on messaging about popular policies, such as cutting waste and fraud in Medicare and Medicaid. FDA changes [01:41] After turmoil in the FDA, new leadership is designed to promote stability. Recent moves to speed drug approvals are likely to continue and offer an important signal about FDA modernization. Chinese innovation [04:31] The administration may be uncomfortable with U.S. in-licensing of Chinese technologies, but it is more likely to respond with incentives than any attempt to block the practice. Drug pricing [06:17] Most Favored Nation mandatory pricing models have yet to be finalized and are likely to be challenged in court. Democrats will not support codification of MFN. Democrat priorities [08:08] Democratic gains in the midterms would have the effect of protecting hospitals from further cuts. Reform of 340B is unlikely, however.

Why the MFN price battle is heading for court, not legislature

Pathfinders in Biopharma

# Full Transcript

**Podcast:** Pathfinders in Biopharma

## Transcript

Welcome back to Pathfinders, a podcast series from RBC Capital Markets, where we explore the fast-moving world of biotech and pharma. In this episode, we're taking a snapshot of U.S. healthcare policy and looking at what might develop in the run-up to the midterm elections. You'll hear a panel from RBC's Global Healthcare Conference featuring Hunter Hammond and Will Humphrey, both from the Capstone Strategy Group. They'll share their insights and predictions around healthcare policy for the elections this fall.

Now, let's dive into the conversation. I think you're going to see the administration continue to play the hits and really try and highlight some of the winning policies that they've succeeded in passing or enacting in the first year. Most notably, I think you're going to see a continued focus on the war on fraud or the crackdown on waste, fraud, and abuse in Medicare and Medicaid.

That has allowed the Republican Party to more effectively message the healthcare policies that they've really been on their back foot for. And that's cuts to Medicaid through OBAA. That is the expiration of the ACA subsidies. That is immigration enforcement in blue cities. At the same time, you'll also see the administration push for additional Most Favored Nation voluntary drug pricing deals.

I'm sure the administration is still trying to get Most Favored Nation drug pricing codified, although nobody's really clear what codification would even look like and the likelihood is very slim. But playing the hits is what I expect. Pivoting to the FDA for a moment, there's obviously been a lot of turmoil at the agency. Acting commissioner now is currently Kyle Diamantis. What does this say about the administration's priorities?

You know, what would we look for in a new commissioner and what do we know about Kyle? Yeah, it says it's an administration that's looking for stability in the FDA. Ultimately, the White House viewed McCary's tenure and that of his allies as a distraction to some of those winning policies. The political intervention in the drug approval process, specifically around vaccines and rare disease medications,

distracted and generated a lot of negative headlines, pulling attention away from the Trump Rx initiative and Most Favored Nation drug pricing agreements. So in McCary's stead, you have Kyle No Drama Diamantis. And that's what the administration is looking for. They often say that the F in FDA is silent.

But I think this is another signal that the White House is looking for a messenger who keeps his head low and plays the hits. Because initiatives like food safety and nutrition are extremely positive. And they're much easier to message relative to a reconstituted ACIP, vaccine policy changes, treatments for autism, etc.

The Ministries has also introduced, and under the former commissioner as well, a number of new programs and initiatives to accelerate drug development...

Why the MFN price battle is heading for court, not legislature

Transcript

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Every day you wait, your competitors are finding
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Why the MFN price battle is heading for court, not legislature

Transcript

Built for investment professionals

Every day you wait, your competitors are findingedge in conversations you're not hearing.

Every day you wait, your competitors are finding
edge in conversations you're not hearing.