Trump seeks lower Medicare drug costs
Administration’s proposal would create reference price based on other countries’ tight controls
The Trump administration’s drug-pricing plan puts the U.S. on a path toward policies like those in Europe, where governments use tight cost controls.
Under the new proposal unveiled at an event at the Department of Health and Human Services on Thursday, President Donald Trump and health secretary Alex Azar said that the administration would create a reference price for high-cost medicines paid for by Medicare, based on comparable prices from other countries.
Trump “wants the kind of discounts that are applied in Germany and the Netherlands, for the reference reimbursement prices to be applied in the U.S.,” said Rodrigo Moreno-Serra, associate professor of global health economics at the University of York in England.
Many governments use similar benchmarks to decide how much to pay for drugs, according to MorenoSerra. “It has worked elsewhere.”
Trump has railed against price controls in other countries, which he says aren’t paying their fair share for life-saving drugs that cost billions of dollars to develop. State-run health systems in many countries in Europe and elsewhere often put caps on drug prices and set high standards for value and effectiveness before adopting new medicines.
Creating an index of prices tabulated from what countries with more centralized health coverage pay would allow the administration to drive down U.S. drug costs without putting in place direct curbs on prices — though Azar rejected the idea that the administration was reading from the playbook of nationalized medical programs to bring the U.S. on par with the rest of the world.
Rather than “divine the value” of a drug, the proposal “respects the fact that pharma voluntarily agreed to sell drugs at discounts elsewhere and we’re saying ‘give us some of that,’ ” Azar said at a briefing with reporters after Trump’s speech.
Trump’s proposal would give Medicare the ability to negotiate with drug companies and take away costbased fees for administering drugs that may encourage doctors to prescribe more expensive medications. The plan will affect about a third of the $30 billion spent each year by Medicare Part B, which covers medications administered at a doctor’s office or in a hospital.