In the Senate, lawmakers have proposed legislation that would penalize drugmakers hiking the prices of their products above the rate of inflation.

Down Pennsylvania Avenue at the White House, the Trump administration has come out with plans to permit limited importing of drugs from abroad.

Both ideas are anathema to the drug industry, which has forcefully argued against government-imposed restrictions on pricing and the foreign sourcing of drugs. Yet pharma CEOs, presenting their companies’ outlook amid release of second quarter earnings this week and last, don’t appear to be panicking.

Instead, top drugmaker executives blended opposition with a hopefulness the industry can keep policy directed at patient out-of-pocket costs rather than price controls. The projection of calm suggests bills like the one that advanced last week out of the Senate Finance Committee might be viewed as the best of bad options for the sector.

“I think the proposals are not something that’s catastrophic for the industry,” said Roche’s pharmaceuticals chief Bill Anderson, discussing the legislation on a July 25 conference call. “But we’d rather see them going more towards paying for patients and lowering patient out-of-pocket costs,” he added. 

Many CEOs also indicated their expectations that legislative proposals would likely be modified, and potentially watered down from current form. The expectation is not unwarranted, given the difficulty of getting major legislation through a divided Congress, not to mention the lobbying heft of the pharmaceutical industry.

“It’s a long road from here,” said AbbVie head Rick Gonzalez on Tuesday. “There will likely be extensive changes that occur to the draft legislation.” 

At least for now, investors appear to agree. Shares of most large pharmas remain worth more than at the beginning of the year, and neither the Senate legislation or the Trump administration’s latest proposal spurred widespread market reactions.

The legislative package would make a number of changes to how drug payments in Medicare are calculated. Most notable, however, is a provision that would require drugmakers pay a rebate back into Medicare if companies increased prices faster than inflation.

Recent years have already seen drugmakers scale back the extent of price hikes taken on their products, starting several years ago with pledges to keep increases below 10% on a list basis. More recently, in part due to criticism from Trump, increases from top companies have more typically ranged between 3% and 6%. 

Penalizing drugmakers for hikes greater than inflation, which was regularly below 2% in recent years, would set a stricter upper bound.

“We’re concerned about the price controls this represents,” said Eli Lilly CEO David Ricks on a July 30 conference call. “While Lilly has already significantly moderated list price increases for our medicines, this policy if enacted would continue to encourage this kind of moderation.”

Ricks, however, viewed this piece of the Senate bill as less likely to pass than other provisions. To his point, an amendment to remove the rebate mandate in Medicare Part D was narrowly defeated in the Finance Committee mark-up by a 14-14 vote. 

His mention of price controls mirrors criticism coming from PhRMA, which met with Trump the day after the Senate bill’s introduction to voice its opposition.

“It replaces the successful, market-based structure of Medicare Part D with Medicaid-style price controls that result in money going to the Federal treasury rather than seniors,” the lobbying group said in a July 25 statement. 

PhRMA, along with drugmaker executives, has been active in lobbying against pricing legislation, including reportedly sending president Stephen Ubl with Bristol-Myers Squibb CEO Giovanni Caforio to Capitol Hill as the Senate bill was emerging.

Drugmaker CEOs found some parts of the Senate bill to love. In addition to the rebate, it would also redesign the Part D benefit, setting a $3,100 cap on what seniors must pay themselves in the so-called donut hole, or gap before catastrophic coverage kicks in.

For pharma, that would check a long-held goal of reducing patient exposure to drug costs, potentially muting some of the public criticism the industry regularly faces. Indeed, many CEOs favored an even more extensive redesign.

“We think that, in general, more can be done to help patients who bear — in present anyway — a disproportionate share of drug costs through out-of-pocket expenses,” said Amgen CEO Robert Bradway on Tuesday. 

Still, while a cap in the donut hole would lower patient costs, pharma might not find itself off the hook that easily. 

“I truly wish PhRMA would stop saying ‘All patients care about is lower [out-of-pocket],” wrote David Mitchell, head of the high-profile patient group Patients For Affordable Drugs, on Twitter. “Patients want lower prices. We understand prices affect our premiums [and] taxes.”