President Trump has nominated Scott Gottlieb, M.D., to be the commissioner of the Food and Drug Administration (FDA). I’ve been a big fan of Dr. Gottlieb’s for some time, and think he is an outstanding choice.
In addition to his role overseeing the FDA, Dr. Gottlieb will be a key policy advisor to the Trump administration on drug pricing. As you will see below, Dr. Gottlieb is unusually familiar with the warped incentives in the gross-to-net bubble—the growing spread between a manufacturer’s list price for a drug and the net price to a third-party payer after rebates.
His solution is to migrate brand-name pricing from today’s formulary rebates to up-front discounts. As I explain below, such a shift would radically disrupt the business models and economics of pharmacy benefit managers (PBMs), wholesalers, and pharmacies. I speculate that the change would be negative for the channel.
Right now, most people believe that we’ll continue to muddle along with our Rube Goldberg system. But if Dr. Gottlieb is confirmed as FDA commissioner, then perhaps we will see a black swan event—a massively important yet unexpected break from current practice. Hmmm…
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