Trump’s Medicare drug-price plan flouts GOP stance

WASHINGTON — In his effort to bring down prescription drug prices, President Donald Trump is testing the limits of a law that prohibits the government from interfering in negotiations between drug manufacturers and insurance companies that provide drug coverage to more than 42 million people on Medicare through Part D plans.

The prohibition was adopted 15 years ago when a Republican Congress added drug benefits to Medicare, and since then, Republicans have repeatedly invoked it to quash Democratic demands for the government to rein in drug costs.

But now, with prices of new drugs often topping $10,000 a year, Trump has unveiled a blueprint to lower drug prices, and some of his ideas envision a larger role for the government.

He wants to require insurers to reduce retail drug prices to reflect the discounts they receive from drug manufacturers. These discounts often take the form of rebates paid to insurers and middlemen known as pharmacy benefit managers.

Trump takes further aim at those rebates by suggesting that Medicare should “restrict or reduce” or perhaps even prohibit their use. Administration officials have said that the rebates, which are a common feature of contracts in the pharmaceutical industry, could be viewed as illegal kickbacks because they reward an insurer for increasing the sales of a drugmaker’s products.

The White House blueprint suggests that it might be better to require a fixed price for a drug, rather than rebates, in contracts between drugmakers and the insurers that offer Medicare’s prescription-drug plans.

Critics say that is exactly the type of interference Congress wanted to prevent.

Under the president’s proposal, Medicare would “dictate the details of pricing arrangements between the parties” — details that, under the Medicare law, are supposed to be worked out in negotiations between drug manufacturers and prescription drug plans, said Wendy L. Krasner, a vice president of the Pharmaceutical Care Management Association, which represents drug-benefit managers such as CVS Health, Express Scripts and OptumRx.

Medicare officials “may not interfere in those negotiations,” she said, and “this free market approach is generally credited for the overwhelming success” of the drug-benefit program.

Premiums for drug coverage and the overall cost of the drug program are below the original estimates, and surveys show that beneficiaries are generally satisfied with the program.