What Does the Trump Administration Mean for Health Care Consulting?

by Phil Stott | January 18, 2017

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Over the last eight years, healthcare is a corner of the consulting industry that has experienced rapid growth--not least because of the passage of the Affordable Care Act. With a new administration about to be sworn in that has repeatedly expressed its opposition to many of the provisions of that Act, it's reasonable to assume that healthcare consultants will remain in demand  as their clients seek to navigate the uncertainty to come.

However, the ACA is not the only area related to healthcare where consultants are likely to see strong demand for their services. Drug pricing, for example, is an issue that has been on the minds of a lot of people in recent years—from Martin Shkreli and his critics, to the furore over the price of an EpiPen, and all the way up to the President-elect's recent comments on the pharma industry.

 

Comments like that, as the tweet implies, tend to cause uncertainty among members of the business and financial community--and where there's uncertainty in the business world, there tends to be demand for consultants.

As you might have suspected, setting prices for drugs is no easy task at the best of times, and is by no means an exact science: as one consultant told me recently, public perception of prices—the kind of pressure seen in the EpiPen case, for example—is definitely taken into account when setting the price of any medication.

(Other factors include the level of competition, how defensible the technology is—part of the issue in the EpiPen case being the patented delivery method, rather than the drug itself—and the size of the market.)

All of which means that the industry could be in for something of a boost if the President-elect follows through on his comments and decides to do something about drug pricing as part of his administration's approach to healthcare.

For proof, look no further than what the CEO of Novartis, Joseph Jimenez, had to say when the Wall Street Journal caught up with him at Davos. The full video is below, but here's the key takeaway for me:

"There has been a lot of discussion about drug pricing, but the thing you have to remember about drugs in the whole health care system is that it's about ten to fifteen percent of total health care cost. So you're not talking about the majority of health care cost—we still have a lot that we have to address. But specifically on pricing: at Novartis we've been thinking about pricing and how we have to shift away from what has been a transactional approach to a value-based approach. And that means focusing on the outcomes and really communicating the value of our medicines and pricing them accordingly. So I think you're going to see the whole pricing situation evolve in pharma over the next few years."

Among those changes: Jimenez touches on the potential for drug companies to get paid for the outcomes of their drugs (an answer that skillfully elides whether or not that will lead to a decrease in prices), as well as the possibility that Novartis will consider investing in the US in the event of a drop in the corporate tax rate.

Whatever else happens under the new administration, then, it's clear that the boom times for health care consulting are nowhere near over—and that those who specialize in drug pricing are likely to be very much in demand. 

Filed Under: Consulting | Education

Tags: healthcare | healthcare consulting | Novartis | video

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