Trump outlines plan to lower drug prices
— President Donald Trump vowed Friday to “derail the gravy train for special interests” as he outlined a strategy intended to lower the cost of prescription drugs by promoting tougher negotiation, more competition and measures to stop foreign countries from taking advantage of American industry.
Trump said the current system has been corrupted by greedy businesses and middlemen who have made “an absolute fortune” through “dishonest double-dealing” at the expense of consumers who need medicine to extend or improve their lives.
“Everyone involved in the broken system — the drugmakers, insurance companies, distributors, pharmacy benefit managers and many others — contribute to the problem,” he said in a speech in the Rose Garden. “Government has also been part of the problem because previous leaders turned a blind eye to this incredible abuse. But under this administration we are putting American patients first.”
Trump’s plan, however, is a break from what he promised on the campaign trail. It does not authorize the government to use its huge purchasing power to obtain lower prices by negotiating directly with drug manufac-
turers, nor does it expand the ability of American consumers to import low-cost prescriptions from abroad.
On Friday, Trump laid out a different approach, saying his administration would cut out the middleman, provide new tools to Medicare to negotiate lower prices, stop limiting pharmacists from helping patients save money and speed up approval of over-the-counter medicines so that fewer will require prescriptions.
He also directed his trade representative to make it a priority to stop foreign countries from forcing American drugmakers to provide medicines at drastically lower prices than in the United States. “It’s time to end the global freeloading once and for all,” Trump said.
Drugmakers defend their prices by saying that research and development is costly and that charging what they charge for medications allows them to fund their research, pay workers and make a profit for their shareholders. Many countries in which the government is the primary payer for health care put direct limits on drug prices.
Trump’s plan includes ideas that experts say could help lower drug prices.
“It’s framed as a pro-competitive agenda, and touches on a range of government programs that the administration can change through regulation — so that the president can take unilateral action,” said Daniel N. Mendelson, the president of Avalere Health, a research and consulting company. “The trick here for the administration is to do something visible before the midterm elections, so they can take credit for an action that reduces drug prices for consumers.”
Republicans are eager to show an achievement on health care this year to counter arguments by Democrats who say Americans are losing coverage because of Trump’s efforts to sabotage the Patient Protection and Affordable Care Act.
Trump’s “blueprint to lower drug prices” has four main themes: increasing competition in drug markets; giving private plans more tools to negotiate discounts for Medicare beneficiaries; providing new incentives for drug manufacturers to reduce list prices; and cutting consumers’ out-of-pocket costs.
The administration would lower out-of-pocket costs for Medicare patients by requiring prescription drug plans to pass on some of the discounts and rebates they receive from drug manufacturers. Patients could see savings at the pharmacy counter. At the same time, Medicare officials say, there could be a modest increase in premiums for Medicare drug coverage.
Health policy experts like this idea because it reduces the burden on patients with serious chronic illnesses and spreads the expense of needed medications across the entire insured population.
But Democrats say Trump’s policy prescriptions fall far short of what is needed, especially next to the populist promises he made in the 2016 campaign.
“I think very expensive champagne will be popping
in drug company boardrooms across the country tonight,” said Rep. Elijah E. Cummings, D-Md., who has been investigating drug prices for the past year. “The president is apparently abandoning his campaign promise to authorize Medicare to negotiate directly with drug companies to lower prices.”
In a round of television interviews Friday morning, Alex M. Azar II, the secretary of health and human services, said the president’s plan included “over 50 different initiatives — very sophisticated, the kind of thing you’d expect from a CEO like Donald Trump, getting at the real heart of the business problem.”
The president’s plan would “unleash those who negotiate for us with the greater powers of the private sector” to obtain good deals, Azar said on the Fox Business Network.
In trade negotiations, the White House wants to put pressure on other countries to increase the prices of brandname drugs, with the expectation that pharmaceutical companies would then lower prices here at home.
America’s trading partners “need to pay more because they’re using socialist price controls, market access controls, to get unfair pricing,” said Azar, a former top executive at the drugmaker Eli Lilly and Co. “And they’re doing it on the backs of their patients. God help you if you get cancer in some of these countries.”
Other nations, also struggling with high drug prices, scorned Trump’s advice on this issue.
“Drug manufacturers in the United States set their own prices, and that is not the norm elsewhere in the world,” a spokesman for the 28-member European Union said Friday. “EU member states have government entities that either negotiate drug prices or decide not to cover drugs whose prices they deem excessive. No similar negotiating happens in the U.S.”
Dr. Mitchell Levine, the chairman of Canada’s Patented Medicine Prices Review Board, which reviews prices to ensure they are not excessive, said in an interview, “With our price regulations, drug companies are still making profits — just lower profits than in the United States.”
Public anger over drug costs has been growing for years as Americans face pricing pressure from multiple sources: New medicines for life-threatening diseases often launch with prices exceeding $100,000 per year. And older drugs for common ailments like diabetes and asthma routinely see price increases around 10 percent annually. Meanwhile Americans are paying more at the pharmacy counter because of health insurance plans that require them to shoulder more of their prescription costs.
Trump officials have hinted for weeks that the plan, in part, will untangle the convoluted system of discounts and rebates between drugmakers and insurers, pharmacy benefit managers and other health care middlemen. FDA Commissioner Scott Gottlieb — another Trump official with industry ties — says this lack of transparency creates perverse incentives in which drugmakers and other health care companies all benefit from rising prices.
“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.
Experts who study drug pricing are encouraged that the discussion has moved on from anger to more sophisticated proposals.
“This is progress, and I think there’s no question that opening up the machine to make it more clear how it works will lead to change — hopefully to constructive change,” said Dr. Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes.
But others warn that there is no guarantee that unraveling the current price-setting bureaucracy will lead to lower prices, because it all starts with drugmakers’ initial prices.
Drugmakers generally can charge as much as the market will bear because the U.S. government doesn’t regulate medicine prices, unlike most other countries.
The result, in part, is the highest drug prices in the world.
The U.S. spent $1,162 per person on prescription drugs in 2015, according to the Organization for Economic Cooperation and Development. That’s more than twice the $497 per person spent in the United Kingdom, which has a nationalized health care system.
Medicare is the largest purchaser of prescription drugs in the nation, covering 60 million senior citizens and Americans with disabilities, but it is barred by law from directly negotiating lower prices with drugmakers. Democrats have long favored giving Medicare that power, but Republicans traditionally oppose the idea.