Trump’s remedy falls short
One of President Trump’s most popular campaign promises was a vow to reduce the price of prescription drugs, which has become a significant burden on Americans across the nation. On Friday, he unveiled his long-awaited plan, dubbed “American Patients First,” with a tough-talking speech in the White House rose garden.
“We will have tough negotiation, much more competition and lower prices at the pharmacy counter,” Trump promised.
It sure sounded good at first. But the immediate response to Trump’s speech was rising costs — of biotech and pharmaceutical stocks.
The two largest indexes for biotech and pharmaceutical companies rose by 2 percent after the president’s remarks; the stocks for individual large drug companies, including Pfizer and Merck, also spiked.
Obviously, investors in the prescription drug industry saw little reason to be concerned that Trump’s new plan will result in reduced profits.
What does that mean for Americans who are worried about the cost of their prescription drugs?
What it means is that some consumers may find some slight relief from the rising cost of prescription drugs under Trump’s plan.
But nothing in “American Patients First” will result in big changes to the drug industry’s business model — or big savings for the American public.
The biggest news out of Trump’s strategy is a focus on the pharmacy middlemen who negotiate between insurers and drugmakers for coverage, payments and rebates.
Drugmakers offer rebates to these middlemen as an enticement for including drugs in benefit packages, and lately, the latter has come under fire for keeping the rebates instead of passing savings onto consumers. Trump promised to “end the gravy train.”
Taking steps on the rebates could lead to lower prices at the pharmacy counter — without cutting into pharmaceutical industry profits.
Trump also said his administration would get rid of a gag rule that prevents pharmacists from helping patients save money, improve Medicare’s ability to negotiate for lower drug costs, and speed up the approval of medicines for over-thecounter use.
His trade representative will make it a priority to “end the global freeloading once and for all,” Trump said, referring to programs that allow foreign countries to force American drugmakers to make drugs available to them for less than the companies would get in the U.S.
But one of the big reasons why many foreign countries enjoy lower prices on U.S. drugmakers’ products than Americans do is because their governments negotiate directly on drug prices.
Despite his campaign promises, on Friday Trump gave no indication that his administration would pursue such tactics.
Nor did he pursue another campaign idea — allowing consumers to import prescription drugs from Canada and other foreign countries where the costs are lower.
Toward the end of his remarks, Trump said his administration would work with Congress on new legislation to further curb drug prices. To seriously dent drug prices, any new legislation will have to be much bolder than this.