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Trump drug pricing order may be weeks away

  • The White House may wait until after the Senate calls a vote on health reform before issuing an executive order on drug pricing.
  • The proposals focus on policies such as value-based pricing instead of major changes like seeking to give Medicare the power to negotiate on the price of drugs.
A pharmacy technician fills a prescription inside a Wal-Mart store in Trevose, Pa.
Mike Mergen | Bloomberg | Getty Images
A pharmacy technician fills a prescription inside a Wal-Mart store in Trevose, Pa.

Donald Trump made several campaign promises about targeting the price of prescription drugs. Now, he plans to make good on those promises, sources say, but any action may be weeks away and lack the teeth that scared investors away from the biotech sector.

The White House may wait until after the Senate calls a vote on health reform before issuing an executive order on drug pricing, according to people familiar with the administration's approach, who asked to remain anonymous as the plans aren't yet public.

Moreover, the proposals being considered don't address major changes such as seeking to give Medicare the power to negotiate on the price of drugs, focusing instead on policies such as value-based pricing.

The White House declined to comment.

There's a "general recognition that the Trump threat to regulate drug prices in a harmful way is receding," Leerink analyst Geoff Porges told CNBC in an email Tuesday. That's helping buoy biotech stocks, he said, as "the light at the end of the tunnel is now in the tunnel!"

The Nasdaq biotechnology index, depressed since presidential candidate Hillary Clinton pledged to take on prescription drug prices in 2015, has surged 4 percent in the last five days, and was up more than 2 percent Tuesday.

Reports from Politico and Kaiser Health News last week around a Trump administration meeting about a potential executive order on drug prices that took place Friday have contributed to something of a relief rally in biotech stocks.

Another factor driving the sector, according to Porges: moves from Trump's new Food and Drug Administration commissioner, Dr. Scott Gottlieb, who's pledged to drive affordability of medicines through increasing competition.

Gottlieb testified Tuesday morning before the Senate Appropriations Committee, focusing on the agency's plan to speed new drugs, particularly those for rare diseases, to market.

"We'll ... be taking a fresh look at policies to support innovation to allow drugs to be targeted only to those patients who are most likely to benefit from the medicine," Gottlieb told the committee.

One part of his plan is to issue new guidance within six months about drugs aimed at specific molecular targets, regardless of where the disease manifests in the body.

This was a major topic at the American Society of Clinical Oncology conference earlier this month: cancer drugs designed not for breast cancer or prostate cancer or lung cancer, but for a specific genetic signature underlying cancers that could arise in multiple clinical settings.

The FDA already has signaled flexibility on this approach, recently issuing the first approval of this kind, for Merck's Keytruda. It approved the medicine for cancers with a genetic feature referred to as microsatellite instability-high (MSI-H) or mismatch repair deficient (dMMR). Young biotech Loxo Oncology is pursuing a similar strategy, and its stock soared more than 50 percent after positive data at ASCO.

"Gottlieb endorsing genetically defined drug approvals (Vertex, Merck, Loxo, Epizyme) ... particularly in oncology is very positive," Porges said. Those stocks were all higher Tuesday.

To be sure, people familiar with the matter said the administration's plans on drug pricing aren't finalized, and the president is eager to fulfill his campaign promises on the issue. He famously declared the drug industry was "getting away with murder" on its pricing about two weeks before his inauguration.

For now, however, biotech investors appear to be breathing a sigh of a relief.

— CNBC Eamon Javers contributed to this story.

Watch: What's behind the biotech breakout