WhiteHouse rolls out newrules that might lower costs of drugs
WASHINGTON— Trying to close outmajor unfinished business, the Trump administration issued regulations Friday that could lower thepricesAmericanspay formany prescription drugs.
But in a time of political uncertainty, it’s hard to say whether the rules will withstand expected legal challenges from the pharmaceutical industry orwhether Presidentelect Joe Biden’s administration will accept, amend or try to roll them back.
“The drug companies don’t like me toomuch. Butwe had to do it,” President Donald Trump said in announcing the new policy at the White House. “I just hope they keep it. I hope they have the courage to keep it,” he added, in an apparent reference to the incoming Biden administration, while noting the opposition from drug company lobbyists.
The two finalized rules, long in the making, would:
Tie what Medicare pays for medications administered in a doctor’s office to the lowest price paid among a group of other economically advanced countries. That’s called the “most favored nations” approach. It is adamantly opposedby critics alignedwith the pharmaceutical industry who liken it to socialism. The administration estimates it could save $28 billion over seven years forMedicare recipients through lower copays. It would take effect Jan. 1.
Require drugmakers, for brand-name pharmacy medications, to give Medicare enrollees rebates thatnowgotoinsurersand middlemen called pharmacy benefitmanagers. Insurers thatdeliver Medicare’s “Part D” prescription benefit say thatwould raisepremiums. The nonpartisan Congressional Budget Office estimates it would increase taxpayer costs by $177 billion over 10 years. The Trump administration disputes that and says its rule could potentially result in 30 percent savings for patients. It would take effect Jan. 1, 2022.
The pharmaceutical industry said Trump’s approachwould give foreign governments the “upper hand” in deciding the value of
medicines in theU.S. and vowedto fight it.
“The administration is willing to upend the entire system with a reckless attack on the companies working around the clock to end this pandemic,” the PharmaceuticalResearch andManufacturers of America said in a statement, adding that it is “considering all options to stop this unlawful onslaught on medical progress and maintain our fight against COVID-19.”
TheU.S. ChamberofCommerce said the “most favored nations” rule would lead to harmful price controls that could jeopardize access to newlifesavingmedicines at a critical time.
Trump also announced he is ending a Food and Drug Administration programthatwas designed to end the sale of many old, and potentially dangerous, unapproved drugs thathadbeen on the market for decades.
Sales of hundreds of these drugs, including some known to be harmful, have been discontinued under the program. But anunintended consequence has been sharply higher prices for consumers for these previously inexpensive medicines after they were approved by the FDA.
Trump came into office accusing pharmaceutical companies of
“getting away with murder” and complaining that other countries whose governments set drug priceswere taking advantage of Americans.
As a candidate in 2016, Trump advocated for Medicare to negotiate prices. As president, he dropped that idea, objected to by mostRepublicans. Instead, Trump began pursuing changes through regulations.
He alsobackedabipartisan Senate bill that would have capped what Medicare recipients with high bills pay for medications while generally limiting price increases. Ambitious in scope, the legislation from Sens. Chuck Grassley, R-Iowa, and RonWyden, D-Ore., did not get a full Senate vote.
Health and Human Services SecretaryAlexAzar, a former drug company executive, said the rules will “break this model where patients suffer, where prices increase every year,” while corporate insiders enrich themselves.
Addressing the prospect of legal battles, Azar said, “We feel that both regulations are extremely strong and any industry challenging themis declaring themselves at odds with American patients and PresidentTrump’scommitmentto lowering out-of-pocket costs.”
The international pricing rule
would cover many cancer drugs and other medications delivered by infusion or injection in a doctor’s office.
It would apply to 50 medications that account for the highest spending under Medicare’s “Part B” benefit for outpatient care. Ironically, the legal authority for Trump’s action comes fromtheAffordable Care Act, the Obama-era health care overhaul he’s tried to repeal.
The rule also changes how hospitals and doctors are paid for administering the drugs in an effort to try to remove incentives for using higher-cost medications.
Relying on international prices to lower U.S. costs is an approach also favored by Democrats, including Biden. But Democrats would go much further, authorizing Medicare to use lower prices from overseas towrest industry concessions for all expensive medications, not just those administered in clinical settings.
Embodied in a House-passed bill from Speaker Nancy Pelosi, DCalif., this strategy would achieve much larger savings, allowing Medicare to pay for new benefits such as vision and dental coverage. It also would allow private insurance plans for workers and their families to get Medicare’s lower prices.