Ways Trump's Drug Price Plan Could Lower Rx Costs

Oscar Cross
May 12, 2018

The president also blasted foreign governments, alleging they force drug companies to sell at low prices in their countries, driving up costs for American consumers.

President Donald Trump will deliver this afternoon a twice-delayed, much-anticipated speech about his plan to lower drug prices - after a year when harsh rhetoric against drugmakers was accompanied by little action.

But he dropped the popular proposals of his campaign, opting not to have the federal government directly negotiate lower drug prices for Medicare. The result would be lower pharmacy costs for patients - a key Trump campaign promise.

The blueprint, which echoes numerous ideas first put forward in Trump's FY 2019 proposed budget and the White House Council of Economic Advisers drug pricing report, focuses on four areas: lowering high list prices set by manufacturers; equipping government and private payers with new tools to negotiate prices; lowering out-of-pocket costs for consumers and taking steps to stop other countries from "freeloading" off of American innovation.

Speaking in the White House Rose Garden, Trump said the current system has been corrupted by greedy businesses and middlemen who have made "an absolute fortune" through "dishonest double-dealing" at the expense of USA consumers who need medicine to extend or improve their lives. "They're not really thinking about the price to the system with those proposals".

Trump decried the participation of what he referred to as "middlemen", meaning primarily Pharmacy Benefit Managers - intermediaries between manufacturers and doctors and pharmacies. The Nasdaq Biotechnology Index rose 2.7 percent on Friday. The sentiment seemed to assuage investors in the company, which saw its shares (NYSE:CVS) rise by about 3.2 percent to close at $64.41 on Friday.

Many of Trump's ideas can be put into effect through regulations or guidance documents.

The administration will pursue a raft of old and new measures meant to improve competition and transparency in the notoriously complex drug pricing system. "That is a lot of time and effort, we likely won't see any of this happen for a very, very long time", said Edward John Allera, shareholder at law firm Buchanan Ingersoll and Rooney.

"I think it's more bark than bite", said Bettelheim. Medicare Part D drug spending grew almost 45% between 2013 and 2016, and more beneficiaries are reaching catastrophic coverage of at least $5,000 out-of-pocket costs-up 50% from 2013 to 2016, according to a new study from Avalere.


Raising Drug Prices in Other Countries Won't Help Here: "There's not a sensible health economist alive, or any economist, that will tell you that higher prices overseas will lead to lower prices here", Andrea Harris, senior vice president of health care at Height Capital Markets in Washington, told Bloomberg.

Democrats were not impressed.

The blueprint echoes some of those initiatives and says curbing abuse of FDA's Risk Evaluation and Mitigation Strategy (REMS) programs will be a priority to help generic drugs come to market faster.

Trump called out those companies early in his speech, but gave no details on what new restrictions or penalties they might face.

The Trump plan does not permit Medicare to directly negotiate with drug companies to lower prices for the 60 million americans enrolled in Medicare Part D. Patients in the US pay as much as six times more for drugs than patients in other countries, according to the International Federation of Health Plans.

US Health and Human Services Secretary Alex Azar, during the press briefing, said that the current system is non-transparent and there is incentive for the drug companies to keep list prices high.

But Azar later told reporters that the administration would "seek input" on doing away with drug rebates in the Medicare system to encourage more direct discounts. Drug prices here are high and have been rising rapidly, with patients who pay out of pocket for brand name drugs especially vulnerable to crushing costs. "Drug manufacturers in the United States set their own prices, and that is not the norm elsewhere in the world", a spokesman for the 28-member European Union said on Friday.

The way drug prices are determined is fundamentally the same everywhere. Explaining that other countries pay "a tiny fraction of what the medicine costs in the U.S".

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