Lost amid last month's hubbub of the surprise election of Donald Trump as US president were votes on initiatives in two states aiming to tackle the high price of drugs and healthcare. In California, Proposition 61 would have allowed state agencies to receive the same drug discounts as negotiated by the US Department of Veterans Affairs, and Colorado's Amendment 69 sought to levy a new income tax to pay for universal healthcare for the state's residents. Both initiatives failed—the former receiving only 46% of the vote, the latter getting little more than 20%. It seems Americans—who currently pay the highest drug prices in the world—are not yet ready to tear down their inefficient healthcare delivery system. But that does not mean drug makers should continue with their present aggressive pricing policies. Nor should they expect the double-digit profits and frequent price hikes of recent times to continue.

As reported in our Feature, “America's drug problem,” on page 1231, the reputation of the drug industry continues to free fall. A major reason for this is that US consumers have increasingly borne the brunt of rising drug costs through higher insurance premiums, deductibles and copays. With consumers nearing the breaking point, why did the initiatives on state ballots fare so badly?

One answer is the power of lobbying and vested interests. Drug makers, hospital networks, pharmacy benefit managers and insurers—all the corporations making money out of health—have an interest in maintaining the current status quo. Thus, those against Proposition 61 raised $109 million, with the top ten donors all pharmaceutical companies. In contrast, the loose coalition in support of the initiative was able to raise less than $17 million. Similarly, Amendment 69 opponents raised >$4 million by the end of October (including $1 million from insurance firm Anthem Health), whereas proponents raised less than $900,000. The imbalance in money and support means that any initiative going against the status quo faces an uphill struggle to reach hearts and minds.

But buying influence is only part of the story. Any new health delivery plan in the United States must also resonate with American cultural mores. It must resonate with a psyche that exults bootstrapping and hard work, espouses capitalism and competition, and above all favors small government. Despite the popularity of government programs like Medicare and Medicaid, any new initiative must navigate this political reality or face intractable opposition and hyperbole—one need look no farther than the 'death panel' critiques aimed at Obamacare. In this context, Proposition 61 smacks of government price controls, and Amendment 69's single-payer system carries the whiff of socialism.

Drug makers are no doubt pleased that these proposals were vanquished—and that a Clinton White House espousing the need for controls on pricing is no longer a threat. But companies should expect continued scrutiny on their pricing strategies nonetheless. Our Feature suggests that in the United States, both private insurers and public providers (e.g., Medicare and Medicaid) will continue their downward pressure on pricing. There is no reason to think that the change in political winds will affect these pressures.

More importantly—even if a new political fix can paper over the cracks in US healthcare economics—the drug industry should consider the repercussions of continued unsustainable pricing on its already flagging reputation.

Continuing pay-for-delay tactics to keep generic drugs off the market is not a cost of doing business. It is unlawful. And it is a practice that should be stamped out. Brand manufacturers should also stop protectionist tactics in which they use the patent system to 'evergreen' brand biologics to suppress competition. Biosimilars need to be given a chance to prove themselves in the marketplace. And brand manufacturers also need to curtail unjustifiable price hikes on old, off-patent biologics, which already have given them very generous patent monopolies.

All these moves go against the grain of shareholder pressure and business instincts, but they could begin to change the public's perceptions—and prevent a political backlash on industry profit-making down the line.

Going forward, drug makers also need to investigate 'value'-based assessments of drug costs. It's agreed that newfound cures for conditions (e.g., some gene therapy treatments) justify a premium. But high-priced drugs that merely ameliorate or stall chronic illnesses, such as multiple sclerosis, and must be taken for life burden both patient and payer. Neither can afford to pay these prices for a lifetime.

Drugs that are indicated for multiple conditions also warrant a rethink; for example, Enbrel (etanercept) cannot have an average wholesale price of $615 per vial across all five of its indications, each with its own level of efficacy and various competing options for treatment. Some indications warrant a cheaper price.

Finally, in defending the justified need for premium pricing on innovative drugs, industry must highlight to the public and politicians that the middlemen—insurers and pharmacy benefit managers—are also contributing to high prices. US trade group the Biotechnology Innovation Organization has begun to mount its defenses in this regard, but more needs to be done to educate the stakeholders.

All these strategies won't guarantee that the next EpiPen is kept out of the headlines or ensure that CEOs spend less time on the carpet before Congress. The truth is that they are just Band-Aids covering the open wound that is unsustainable US healthcare economics. Beneath the gauze remains an obsolete health delivery and reimbursement system that is bleeding out. Sometime in the future the system will fail. In the meantime, business practices will adapt to the latest evolution in healthcare economics. But industry would do well to prepare for the day when the revolution will come.