Trump ad­justs fo­cus on cut­ting drug prices

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WASH­ING­TON — After two set­backs this week, Pres­i­dent Don­ald Trump is now fo­cus­ing his drive to curb drug costs on con­gres­sional ef­forts aimed at help­ing peo­ple on Medi­care and younger gen­er­a­tions cov­ered by work­place plans.

The White House on Thurs­day yanked its own reg­u­la­tion to ease the fi­nan­cial bite of costly med­i­ca­tions for those on Medi­care by let­ting them get re­bates that drug­mak­ers now pay to in­sur­ers and mid­dle­men. A con­gres­sional agency’s es­ti­mate that the plan would have cost tax­pay­ers $177 bil­lion over 10 years seemed to seal its fate.

Ear­lier a fed­eral judge ruled that the ad­min­is­tra­tion lacked the le­gal author­ity to re­quire drug­mak­ers to dis­close list prices in their TV ads. The rul­ing Mon­day blocked a highly vis­i­ble change ex­pected to have started this week.

Both price dis­clo­sure and the re­bate idea were part of a strat­egy on drug costs that Trump an­nounced at the White House with much fan­fare last year.

“This is a big setback,” said Peter Bach, di­rec­tor of the Cen­ter for Health Pol­icy and Out­comes at New York’s Me­mo­rial Sloan Ket­ter­ing Can­cer Cen­ter. The re­bate rule “was not good

pol­icy [since] it would have in­creased spend­ing on pre­scrip­tion drugs even if it mildly re­duced out-of-pocket costs in some cases. But nev­er­the­less this was a cor­ner­stone of the blue­print.”

White House spokesman Judd Deere said the re­bate pro­posal was with­drawn “based on care­ful anal­y­sis and thor­ough con­sid­er­a­tion.”

Deere said Trump is not back­ing away from his prom­ise to lower drug prices, and the ad­min­is­tra­tion is set­ting its sights on bi­par­ti­san leg­is­la­tion. One idea would cap drug co­pays for peo­ple with Medi­care, which would pro­duce sav­ings for se­nior ci­ti­zens tak­ing costly drugs. That’s another way to achieve a sim­i­lar goal as the re­bate plan.

“The Trump ad­min­is­tra­tion is en­cour­aged by con­tin­u­ing bi­par­ti­san con­ver­sa­tions about leg­is­la­tion to re­duce out­ra­geous drug costs im­posed on the Amer­i­can peo­ple, and Pres­i­dent Trump will con­sider us­ing any and all tools to en­sure that pre­scrip­tion drug costs will con­tinue to de­cline,” Deere said in a state­ment.

While agree­ing it’s a setback for Trump, John Rother of the Na­tional Coali­tion on Health Care said that if leg­is­la­tion could be worked out, “that might ac­tu­ally lead to a bet­ter outcome.” His or­ga­ni­za­tion is an um­brella group that rep­re­sents a cross sec­tion of busi­ness and con­sumer groups.

The chair­man of the Se­nate Fi­nance Com­mit­tee, Charles Grass­ley of Iowa, and the com­mit­tee’s top Demo­crat, Sen. Ron Wy­den of Ore­gon, are try­ing for a com­pro­mise cen­tered on low­er­ing drug costs for gov­ern­ment pro­grams such as Medi­care and Med­i­caid. Top ad­min­is­tra­tion of­fi­cials this week par­tic­i­pated in a closed meet­ing among Grass­ley and Repub­li­can sen­a­tors on his com­mit­tee.

Grass­ley said in a state­ment that he had concerns about the ad­min­is­tra­tion’s re­bate rule but was con­fi­dent about the prospects for leg­is­la­tion. “While the fi­nal de­tails are still be­ing ne­go­ti­ated, we’re on track to re­port a bill out of com­mit­tee very soon,” he said.

Sep­a­rately, Grass­ley and Illi­nois Sen. Dick Durbin, the cham­ber’s sec­ond-ranking Demo­crat, are push­ing leg­is­la­tion that would grant the gov­ern­ment the power to re­quire drug com­pa­nies to dis­close their prices in con­sumer ad­ver­tis­ing.

House com­mit­tees are also work­ing on leg­is­la­tion, and Speaker Nancy Pelosi, D-Calif., re­mains in contact with the White House on a drug cost com­pro­mise. Changes to Medi­care often have an im­pact on em­ployer in­sur­ance, but the main div­i­dend for work­ing fam­i­lies could come from leg­is­la­tion to pro­mote phar­ma­ceu­ti­cal com­pe­ti­tion.

The re­bate plan was crafted by Health and Hu­man Ser­vices Sec­re­tary Alex Azar but ran into op­po­si­tion from White House budget of­fi­cials. That push-back stiff­ened after the non­par­ti­san Con­gres­sional Budget Of­fice es­ti­mated that the plan would have lit­tle ef­fect on man­u­fac­turer prices and would cost Medi­care $177 bil­lion over 10 years by lead­ing to higher pre­mi­ums sub­si­dized by tax­pay­ers.

Trump’s re­ver­sal on re­bates was a win for in­sur­ers and mid­dle­men called “phar­macy ben­e­fit man­agers” who ad­min­is­ter pre­scrip­tion drug plans for large blocks of in­sured pa­tients.

Shares of sev­eral big com­pa­nies that man­age pre­scrip­tion ben­e­fits started climb­ing early in the day.

It was a de­feat for the phar­ma­ceu­ti­cal in­dus­try, which had lob­bied to pro­mote re­bates. Drug­mak­ers pre­fer that to other ap­proaches law­mak­ers are con­sid­er­ing. Those in­clude “in­fla­tion re­bates” that drug­mak­ers would be pay­ing di­rectly to Medi­care if they raise prices be­yond a yet-tobe-de­ter­mined mea­sure.

“The ad­min­is­tra­tion has aban­doned one of the only pol­icy solutions that would have truly low­ered what pa­tients are forced to pay out of pocket for the medicines they need,” Jim Green­wood, head of the Biotech­nol­ogy In­no­va­tion Or­ga­ni­za­tion, said in a state­ment.

Re­bates are a largely un­seen part of the com­plex world of drug pric­ing.

Un­der the ad­min­is­tra­tion’s plan, drug­maker re­bates now paid to in­sur­ance com­pa­nies and their mid­dle­men would have gone di­rectly to se­nior ci­ti­zens in Medi­care’s Part D pro­gram when they filled their pre­scrip­tions.

But con­gres­sional an­a­lysts con­cluded that drug com­pa­nies were un­likely to lower list prices across the board in re­sponse to the plan. Mean­while, in­sur­ers would raise pre­mi­ums to com­pen­sate for the loss of re­bates.

The Trump ad­min­is­tra­tion wants to mod­ern­ize the Medi­care Part D pre­scrip­tion-drug ben­e­fit, par­tic­u­larly by ex­pos­ing in­sur­ers to more risk so they bet­ter ne­go­ti­ate drug prices, a se­nior ad­min­is­tra­tion official said.

The move would re­quire in­sur­ers to pay more than they do now in cer­tain phases of Part D where ben­e­fi­cia­ries have a gap in gov­ern­ment cov­er­age or have reached a max­i­mum out-of-pocket cost that pulls them out of that gap.

La­bor Depart­ment data in­di­cate that changes may be afoot with drug prices.

Over­all pre­scrip­tion drug in­fla­tion seems to have sta­bi­lized, with more monthly de­clines than in­creases re­cently. The White House cred­its Trump for that change, but in­de­pen­dent ex­perts say the trend isn’t to­tally clear yet.

Trump has sig­naled that he is open to al­low­ing Amer­i­cans to im­port cheaper drugs from other coun­tries, throw­ing sup­port be­hind Florida Gov. Ron DeSantis’ move to create a drug-im­por­ta­tion pro­gram in his state. Some Se­nate Repub­li­cans, such as Grass­ley, have also in­di­cated that they sup­port such a move.

Azar said Thurs­day that his concerns that such a pro­gram would put patient safety at risk have waned, say­ing the drug-sup­ply chain “has changed sub­stan­tially.”

Trump men­tioned last week a “fa­vored-nation clause” that his ad­min­is­tra­tion is work­ing on, but he didn’t elab­o­rate. Last year, he out­lined a pro­posal to base the price the U.S. gov­ern­ment pays for some drugs on cheaper prices in other coun­tries, where na­tional health pro­grams use their con­sid­er­able bar­gain­ing mus­cle to con­tain costs.

Repub­li­cans have been skep­ti­cal of the idea, as it re­lies on prices in coun­tries where gov­ern­ments largely set them in­stead of al­low­ing them to be de­ter­mined by the mar­ket. Grass­ley, whose com­mit­tee has ju­ris­dic­tion over Medi­care and Med­i­caid, said last month that he op­posed the idea.

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