Trump wants higher drug prices overseas to lower prices at home
- Author: Megan Austin May 12, 2018,
May 12, 2018, 12:53
"The President's proposals... do nothing to hold wealthy drug companies accountable for their unconscionable price gouging", Pelosi said on Friday. "While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients' access to innovative treatments".
The administration's "American Patients First" plan, released via a speech and an accompanying 38-page "blueprint" document, laid out some relatively modest actions aimed at spurring generic competition, making it easier for Medicare (the government-funded health program for seniors) to manage high drug costs and negotiate discounts, making drug prices more transparent to consumers in advertising, and allowing pharmacists to tell consumers when they can save money on cheaper drugs.
After more than a year of waiting for a clear policy direction from Trump's ominous statements on drug prices, the industry is worked up.
"Right now, we don't have a truly free market when it comes to drug pricing, and in too many cases, that's driving prices to unaffordable levels for some patients", Gottlieb said in a speech last week. "We're very much eliminating the middlemen", Trump said. "The middlemen became very, very rich". Industry experts were unmoved. Express Scripts (NASDAQ: ESRX) shares closed at $72.80, up almost 2.6 percent, while CVS Health (NYSE: CVS) shares closed at $64.41, up 3.1 percent.
Prescription drug spending increased just 1.3 percent to $328 billion in 2016, according to the Centers for Medicare and Medicaid Services, a dramatic slowdown from past years when prices rose with the introduction of new specialty medications.
And older drugs for common ailments like diabetes and asthma routinely see price hikes around 10 percent annually. "We will have tougher negotiation, more competition and much lower prices", he said.
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. "EU member states have government entities that either negotiate drug prices or decide not to cover drugs whose prices they deem excessive".
"If Medicare starts negotiating with prescription drug companies, there's gonna be cost cutting". Other proposals include speeding the process of switching prescription drugs to over-the-counter medicines.
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Trump argued that other countries take advantage of the U.S. pharmaceutical industry and its investments in research and development, claiming that bringing downs costs at home would require increasing prices in foreign countries.
No one with a stake in drug prices - whether pharmaceutical companies, pharmacy benefit managers that negotiate on drug prices or health insurers - feels completely comfortable, given Trump's tendency to go off-script - including that time he accused drug companies of "getting away with murder". "If not, all of this other stuff seems like window dressing, important window dressing, but window dressing".
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. But the plan didn't address a safe harbor for value-based arrangements and the legal risks related to kickback laws and off-label promotion, she said.
The US government has also called to reduce regulatory burdens.
Democrats called Trump's promises hollow, pointing to December's tax law that slashed the corporate tax rate for drug manufacturers, insurers and pharmacy benefit managers. HHS has 50 actions planned or under consideration, which can be done through administrative and executive action, Azar said, adding that it will likely take months to roll out numerous policies.
CVS, which runs a large PBM, said policies that lowered drug prices would be aligned with its business model and are unlikely to have a negative impact on profitability.
"Every incentive is toward higher list prices because everyone in the system gets a cut off that list price except the patient", said Azar, speaking on "Fox and Friends" on Friday morning. Health plans provide more favorable formulary placement in exchange for the rebates. Democratic Rep. Lloyd Doggett of Texas dismissed Trump's plan as "a sugar-coated nothing pill".
"I'm excited", Cassidy said.