Trump touts competition as a strategy to lower drug prices

Lucy Bush
May 12, 2018

The administration's blueprint recycles several previous proposals, but a new part of the plan includes leveraging trade agreements to try to reduce prices by pushing other nations to pay more.

The administration will pursue a raft of old and new measures meant to improve competition and transparency in the notoriously complex drug pricing system. "A study previous year by the industry journal Health Affairs found that the premiums that drugmakers earn by charging more for US medicines far outweigh the amount they spend on developing new products". "When foreign governments extort unreasonably low prices from USA drug makers, Americans have to pay more to subsidize the enormous cost of research and development", he said.

But others warn there is no guarantee that unraveling the current pricing-setting bureaucracy will lead to lower prices, because it all starts with drugmakers' initial prices.

Trump also denounced foreign countries that he said "extort unreasonably low prices from USA drugmakers" so that their citizens often pay much less than US consumers for the same drugs.

Azar also said the FDA would "immediately" look into requiring drugmakers to disclose prices in their ads, although the details are unclear.

Those include requiring insurers to share rebates from drug companies with Medicare patients and changing the way Medicare pays for high-priced drugs administered at doctors' offices. It's an approach that could avoid a direct confrontation with the powerful pharmaceutical lobby, but it could also underwhelm Americans seeking relief from escalating prescription costs. "We're not calling for Medicare negotiation in the way that Democrats have called for", one of the senior officials told reporters Thursday night.

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"This weak plan abandons the millions of hard-working families struggling with the crisis of surging drug prices", said Democratic Leader Nancy Pelosi, in a statement. Pharmaceutical stocks dipped slightly during the president's speech before rising again.

"Trump had a choice today: to seek disruptive fundamental reform or to embrace more incremental steps", wrote Terry Haines, a financial analyst, in an investment note.

Some parts of the plan were previously proposed in the president's budget proposal sent to Congress, including providing free generic drugs to low-income seniors and sharing rebates from drugmakers with Medicare patients. Bill Cassidy, R-Louisiana, who's called for a number of the policies on prescription drugs the Trump administration is now planning on implementing. The administration's wide-ranging framework targets what Trump called "the tangled web of special interests", taking aim at both drug manufacturers and the so-called middlemen - insurance companies and pharmacy benefit managers.

Trump returned somewhat to his previous fiery rhetoric against the industry, accusing the drug lobby of making an "absolute fortune" at the expense of patients. But as president he has shied away from major changes and has staffed his administration with appointees who have deep ties to the industry. HHS Secretary Alex Azar, who also spoke Friday, seemed to warn that some of these changes would take time. But the officials gave few specifics.

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

"This is a total rip-off, and we are ending it", Mr. Trump said in his speech on Friday.

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As public outrage increases, there are growing calls by patient advocates and others for more government regulation of prices, a practice common in other industrialized countries. Meanwhile Americans are paying more at the pharmacy counter due to health insurance plans that require them to shoulder more of their prescription costs. Site neutrality rules could also eliminate differences in inpatient and outpatient Medicare payment policies for drugs.

But Big Pharma Should Still Be On Notice: "The industry is among the most profitable of any industry in the USA and as such probably has room to give", Wells Fargo analyst David Maris told Bloomberg.

"It's hard to know why Germany or France or Australia would agree to something like that", said Professor Jack Hoadley of Georgetown University's Health Policy Institute.

Trump also placed blame on foreign governments, which negotiate lower drug prices than in the United States, saying they "extort" unreasonably low prices from USA drug manufacturers.

It said the administration's immediate actions would include allowing commercial plans that administer Medicare Part D prescription drug benefits for seniors more power to negotiate prices with drug makers. "ACS CAN will continue its advocacy efforts to ensure patients have access to quality, affordable health care coverage for all their needs, including prescription drugs".

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Other reports by Info About Network

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