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Actually, Trump could succeed in lowering drug prices

Prescription drugs
Jose Luis Pelaez | Getty Images

President-elect Donald Trump is on a negotiating roll.

He's still enjoying great publicity for his deal with Carrier to keep 1,100 jobs in Indiana, seems to have effectively used Twitter to impress upon Boeing the need to cut its price for the new Air Force One program, and the CEO of Japan's SoftBank even came to Trump Tower on Tuesday to announce a $50 billion investment in the U.S.

And now, in an interview with Time Magazine for the issue that names him as the magazine's "Person of the Year," Trump put the drug industry in his crosshairs, saying he is going to bring down prescription drug prices.

That set off a firestorm, with drug stocks taking a hit and speculation swirling about whether his choice to lead the Department of Health and Human Services, Tom Price, or Congress, would allow that to even happen.

I'm with Wall Street on this one. After what we've seen him do in the past few weeks alone, I wouldn't bet against him. Trump is once again uniquely positioned to get it done.


"Trump would like us all to think that he's the master negotiator and that's the only real reason why he can and possibly eventually will make some headway on reducing prescription-drug costs. But that angle is only half of the story."

No, it's not because Trump is a saint or a savant or even the toughest guy on the block. But it is because Trump continues to be a unique combination of two things we really haven't ever seen in the modern White House: A business negotiator and a politician will no actual political ideology.

The characteristic Trump seems to value the most about himself is his persona as a deal maker. Yes, that's why the title of his most successful book is "Art of the Deal" and he references it all the time. Critics of his businesses record can quibble about how wealthy he really is and how much success he's had overall, but only a fool would deny that Trump is adept at dealmaking and certainly delights in the give and take of it all. Having the presidency and all of the deal-making apparatus the White House gives him is definitely making Trump look like a kid in the candy shop right now.

With the drug companies, he indeed has a lot of negotiating power. We know they will listen closely to everything Trump says about lowering their corporate taxes because Big Pharma has been such a leader in the corporate tax inversion craze in recent years. We know those companies will also listen because Trump wants to reduce regulations and prescription drugs are possibly the most regulated products in America. Drug companies also happen to manufacture many of their most expensive and popular drugs overseas, which has added to our trade deficit in a big way over the last decade. Don't be surprised if those companies are willing to lower the prices of those foreign-made drugs in return for promises that Trump will lay off their heavy use of overseas plants. There are more examples, but this is not a negotiation where the only thing Trump will have in his pocket is the fact that he's the new president.

Will Trump get a commitment from the drug makers to cut prices on the biggest drugs by a certain percentage in return for killing off a set of costly regulations? He certainly could. Will he issue a special new tax deduction or credit for Big Pharma that offsets lower drug revenues? It's possible. He likes to make deals and he has a Republican Congress likely to back him if he does.

But here's a question we have to ask: Sure, Trump is a guy who likes to negotiate, but haven't all the recent Presidents of the United States had basically the same negotiating tools at their disposal? At one time or another, Bill Clinton, George W. Bush, and Barack Obama had their party in control of Congress and at least the option to make the same kind of deal Trump seems poised to make. So why didn't they? The easy answer is usually something along the lines of blaming crony capitalism or the power of lobbyists and corporate donors. But the real answer lies in recognizing another truly unique thing about Trump: He really has no discernible political ideology.

It's important to understand that Trump is clearly not beholden to the conservative Republican ideology of keeping Big Government out of free enterprise as much as possible. He slayed that supposedly sacred cow during the GOP primaries and still won the nomination in a landslide. And Trump also is not going to be held down by the liberal Democrats' ideology that bemoans special tax breaks and other "corporate welfare" deals to big corporations. As this election developed, it became more and more clear that Trump was, in essence, a third-party candidate running on the Republican ticket out of personal expediency. Yes, the GOP will take the lion's share of the political profits from Trump's win. But a great deal of the GOP conservative ideology is going to be sacrificed in return. It already has. Trump isn't even president yet and he's sacrificed a lot of it already.

Trump would like us all to think that he's the master negotiator and that's the only real reason why he can and possibly eventually will make some headway on reducing prescription-drug costs. But that angle is only half of the story. No negotiator or president can get anything done as long as the person or company on the other side of the table knows there are certain tools or threats the president won't be able to use in the end. Adherence to one political ideology or another has always kept a lock on some of the best tools a president could use in economic negotiations of all kinds. But Trump's lack of political ideology is the key to unlock those tools and he's clearly showing he has no philosophical problem with using it.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

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