Northwest Arkansas Democrat-Gazette
Plan aired to lower Medicare drug costs
Price negotiation key, Trump says
WASHINGTON — President Donald Trump said his administration is taking immediate action to stop the “global freeloading” by foreign nations when it comes to the price that American patients are paying for prescription drugs.
In a speech Thursday afternoon at the Department of Health and Human Services, Trump said his administration would be taking the “revolutionary” step of allowing Medicare to directly negotiate prices with drug companies that he says have “rigged” the system, causing U.S. patients
to pay more for their medicines.
“Americans pay more so other countries can pay less. It’s wrong. It’s unfair,” Trump said.
Trump has long promised sweeping action to attack drug prices, both as president and when he was running for the White House. He made his announcement just ahead of the Nov. 6 elections, with health care high among voters’ concerns. He argued other countries were being “very disrespectful” by selling their prescription drugs to Americans for higher prices than their own citizens are paying for them.
The proposal is structured as an experiment through a Medicare innovation center empowered to seek savings by the Patient Protection and Affordable Care Act, and would apply to half the country. Officials said they’re seeking input on how to select the areas of the country that will take part in the new pricing system. Health and Human Services Secretary Alex Azar said politics would have nothing to do with it.
Officials said the complex proposal could take more than a year to put into effect.
Under the new approach, the Centers for Medicare and Medicaid Services plans to experiment with a new way of setting prices for most drugs administered through Medicare’s Part B program, which covers all doctor’s visits for senior citizens and the drugs prescribed to them during their visits.
The plan would not apply to medicines people buy at the pharmacy, just ones administered in a doctor’s office, as are many cancer medications and drugs for immune system problems. Physician-administered drugs can be very expensive, but pharmacy drugs account for the vast majority of what consumers buy.
The Health and Human Services Department estimates the new pricing index would save Medicare $17.2 billion over five years. Medicare now pays the average sales price of a medicine in the United States, plus an extra fee based on a percentage of that price. Under the new model, Medicare would pay fees to doctors that are more closely aligned with what other countries pay.
Drugmakers immediately pushed back, arguing the plan amounts to government price-setting.
“The administration is imposing foreign price controls from countries with socialized health care systems
that deny their citizens access and discourage innovation,” Stephen Ubl, president of the Pharmaceutical Research and Manufacturers of America, said in a statement. “These proposals are to the detriment of American patients.”
Trump is linking the prices Americans complain about to one of his long-standing grievances: foreign countries the president says are taking advantage of U.S. research breakthroughs.
Drug-pricing expert Peter Bach of Memorial Sloan Kettering’s Center for Health Policy and Outcomes called the plan “a pretty substantive proposal” but one that faces “serious political challenges.”
The proposal is Trump’s boldest action yet to lower drug prices, which the president says has been a key goal of his administration. It suggests a more prominent role for the government in setting drug prices than many Republicans may be comfortable with.
It also highlights an increasing push by the president personally and his administration more generally
to emphasize health care in the run-up to the elections, an issue polls show is important to voters. On Wednesday afternoon, the president signed legislation to tackle the opioid epidemic and he has tweeted that “all Republicans” will protect people with pre-existing health conditions in response to Democratic claims otherwise.
“It’s hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions,” Senate Minority Leader Charles Schumer, D-N.Y., said in a statement.
On the campaign trail, Democrats have been hammering away at Republicans for their failed attempt last summer to repeal and replace the Affordable Care Act, which enabled those with previous illnesses to receive affordable health care. Trump’s administration has worked to chip away at
several Affordable Care Act requirements, including supporting GOP repeal of the individual mandate in the party’s tax overhaul and supporting waivers for Medicaid work requirements.
Trump’s announcement on drug prices came hours after the Health and Human Services Department released a report highlighting the steep spending by the U.S. government on prescription drugs.
The report compares the prices paid by Medicare for 27 prescription drugs with the average prices paid for the same drugs by countries with similar economic conditions. It concludes the higher U.S. prices means Medicare pays nearly twice as much as the program would pay for the same or similar drugs in other countries. During his speech, Trump cited an example of a “common” cancer drug that he says is seven times more expensive for Americans than for those living outside the United States.
The United States is the biggest funder of research and development in the pharmaceutical sector, yet
currently lacks the bargaining power to bring prices down — unlike in countries with public health care programs.
“Medicare could achieve significant savings if prices in the U.S. were similar to those of other large market based economies,” the report concludes.
In a Twitter post, Azar said, “Medicare was found to be paying the highest price for 19 out of the 27 drugs studied.” In only one case was Medicare paying less than the international average, he said.
Among the drugs included in the study were Aranesp, Avastin, Herceptin, Keytruda, Lucentis, Neulasta, Opdivo and Rituxan.
The report uses foreign drug prices as a reference to judge prices in the United States. In many foreign countries, officials negotiate prices with drug manufacturers.
While Democrats have long pushed for negotiations, Republicans have blocked them, fearing Medicare could eventually dictate prices or restrict access to drugs deemed to be too expensive.
Trump’s announcement represents the next leg in the administration’s quest to appear tough on the pharmaceutical industry. Medicare, which covers 55 million elderly and disabled Americans, is responsible for 29 percent of the nation’s prescription drug spending.
The Health and Human Services Department report “provides troubling insight into how the current international drug pricing system has put America in last place,”Azar tweeted. The 19-page report looks specifically at drugs purchased and dispensed by doctors themselves under Medicare’s Part B program. In the past, Azar has taken aim at that particular piece of the program as its spending has grown much faster than for drugs dispensed by pharmacies under Medicare’s Part D program.
Information for this article was contributed by Paige Winfield Cunningham and Felicia Sonmez of The Washington Post; by Ricardo Alonso-Zaldivar and Deb Riechmann of The Associated Press; and by Robert Pear of