Donald Trump appoints adviser who helps big pharma hike drug prices

President Trump publicly called out Merck CEO Kenneth Frazier for high drug prices after he resigned from the President’s American Manufacturing Council (AP Photo/Evan Vucci)

Donald Trump’s new senior economic adviser has helped pharmaceutical companies lobby to charge astronomical prices for crucial drugs.

Last Monday, the White House confirmed that Tomas J. Philipson, a health care economist, was joining the President’s Council of Economic Advisors.

That announcement was made just hours after Trump publicly accused Merck CEO Kenneth Frazier of charging patients “ripoff prices” for drugs after he resigned from the President’s Manufacturing Council in protest at the president’s response to the violence at a white nationalist rally in Charlottesville, Virginia last weekend.



Pharmaceutical titan Frazier was subsequently joined by a slew of high-profile CEOs as business leaders made clear their displeasure at the president’s response to white supremacist violence.

“I resigned because I want to make progress, while many in Washington seem more concerned with attacking anyone who disagrees with them”, said Intel CEO Brian Krzanich.

True to form, Trump hit back via Twitter.


But as it became clear that there would soon be no CEOs left to fill his council, Trump relented.


He has also since disbanded the Presidential Advisory Council on Infrastructure, which had yet to even meet.

Which brings us back to the Council of Economic Advisors, one of the few such bodies left standing. Philipson — who briefly served as a healthcare adviser to the Trump campaign — is the second appointment to the three-member body, which was established in 1946 to advise the president on economic issues.

Drugmakers in the U.S. have faced withering criticism in recent times for soaring prices, including by Congress and the president, though he has yet to actually act on his promise to contain them.

Perhaps that explains why the official White House statement announcing Philipson’s appointment to the council includes a lengthy list of the universities he’s taught at but no mention of the company he co-founded, Precision Health Economics.

PHE describe themselves as a “world-renowned, cutting-edge consultancy firm” that specialises in health policy, economics, and analytics.

It all sounds impressive and relatively harmless, but according to a ProPublica investigation earlier this year, the company has been enlisted by pharmaceutical companies to mount relentless public relations campaign touting new treatments and persuading insurers, including U.S. government programs such as Medicare, to cover the costs.

The price of one new course of treatment for the hepatitis C virus can reach $1,000 per day, but with their legion of well-regarded economists and health care experts from America’s top universities, Precision Health Economics have been able to use congressional hearings and academic journals to persuade private insurers and public health programs to keep shelling out.

Precision Health Economics has boasted at least 25 pharmaceutical and biotech companies as clients, including giants like Amgen, Gilead, and Pfizer. They also, coincidentally enough, have consulted for Merck — whose CEO Trump denounced for gouging prices just this week.

The company’s founders, including President Trump’s new economic adviser Tomas Phillipson, recruited an impressive group of high-profile academics to consult for these clients. Some in higher education have expressed concerns that such a tight relationship with industry might suggest bias. “I personally find, when your enterprise relies so substantially on a particular source of funds, you will tend to favor that source”, said Princeton economist Uwe Reinhardt.

According to its brochure, the company is intimately involved throughout the process of launching a drug — advising on pricing strategy and then lobbying publicly to demonstrate the drug’s value once it comes on the market.

The ProPublica story explains: “While collaboration between higher education and industry is hardly unusual, the professors at Precision Health Economics have taken it to the next level, sharpening the conflicts between their scholarly and commercial roles”.

Indeed, the firm has helped pioneer a new strategy for setting drug prices — their overall value to society.

While this can keep prices down and ensure a drug’s effectiveness in saving lives and ability to limit future health spending is taken into account —particularly for countries with national health systems, like the UK, which rely on official analyses of cost-effectiveness to decide which drugs to pay for — experts suggest it could also have a negative impact.

At the congressional briefing on the new hepatitis C drugs, Harvard Medical School associate professor and Precision Health Economics consultant Anupam Jena suggested that part of a drug’s value should be seen as earning enough profit for pharmaceutical companies that they are incentivised to develop treatments for other diseases.

Princeton economist Reinhardt told ProPublica that this method of pricing drugs would effectively give big pharma carte blanche to charge what they want. “If you did value pricing and say it’s OK for the drug companies to charge up to what the patient values his or her life to be, you are basically saying that the pharmaceutical companies can take your savings”, he said.

Precision Health have been involved in a number of controversies over widely disputed academic studies and op-eds which espoused the benefits of drugs developed by pharmaceutical companies for whom the firm was consulting.

From a $14,000-per-year inhibitor to battle cholesterol to a $150,000-per-year cancer treatment, the firm stands accused of conducting and promoting spurious research to promote costly treatments that will profit its clients at the cost of ordinary Americans.

President Trump has found himself isolated from business leaders in recent weeks following his response to white nationalist violence. He may not want to lose another adviser, but if he is indeed as concerned about “ripoff drug prices” as he suggests, he might look no further than his Council of Economic Advisers.

Yahoo News has contacted PHE for comment.

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