Trump Announces Drug Pricing Policy Proposals

On Friday, President Trump announced his Administration’s long-awaited drug pricing policy proposals, known as his “Blueprint To Lower Drug Prices.”

The Administration’s plan is a combination of smaller-scale proposals intended to tackle high drug prices, including a program to offer free generic drugs for low-income seniors, a rebate-sharing requirement for Medicare Part D, and a cap on out-of-pocket costs for Part D members.

President Trump also said that his Administration will “make sure Medicare Part D incentives encourage drug companies to keep prices low.”

During his speech, President Trump was tough on the “middlemen” in the health care industry—singling out health insurance companies and pharmacy benefit managers (PBMs) specifically. President Trump blamed drug manufacturers, payers, and PBMs for causing high drug prices, claiming that they have become “very, very rich” at the expense of American taxpayers and patients. A press release for the Blueprint states that the Administration will seek feedback on how to require “PBMs to act in the best interests of patients.”

President Trump’s plan will also tackle global sales of drugs made in the United States. The Administration wants to stop first-world foreign powers from using regulations and negotiations to keep their drug prices lower than the same drugs cost in the United States. Alex Azar, secretary of the HHS, recently described this practice as foreign countries “free-riding off of American investment in innovation.”

“Americans have to pay more [than foreign countries] to subsidize research and development,” President Trump said during his speech. “For the same pill, with the same ingredients, in the same packaging, made in the same plant—and that is unacceptable… It’s time to end the global free-loading once and for all.”

While the President’s Blueprint lacks immediate action on allowing Medicare to negotiate drug prices, it does include language to “examine which Medicare Part B drugs could be negotiated for a lower price by Part D plans, and improv[e] the design of the Part B Competitive Acquisition Program.”

During his speech, the President was also tough on previous Administrations, claiming that the government has historically “been part of the problem because previous leaders have turned a blind eye to this abuse.” He added that previous government policy “actually encourage higher drug prices.”

Despite this tough talk, the lack of any significant action on Medicare drug pricing negotiations, coupled with the Administration’s stance on increasing foreign drug prices, is being viewed as a win for the pharmaceutical lobby.

The plan to pass on rebate dollars directly to Medicare Part D customers is part of a wider trend sweeping the health insurance industry. In recent months, a number of large payers and PBMs have unveiled similar plans to get drug rebate savings directly to the customer at the point of sale. However, in a recent AHIP blog post, Alicia Caramenico, Director of Communications at AHIP, explained that this process also lets drugmakers off the hook for high prices.

“One thing that won’t make pharmaceuticals more affordable: rebates,” she wrote. “Experts agree that point-of sale rebates do nothing to address the fundamental issue of high drug prices. They also nothing to stop drug companies from increasing the drug prices to fill their pockets. The real problem is that drug prices are determined and controlled 100 percent by drug companies.”

President Trump criticized the “tangled web of special interests,” that have spent millions in lobbying Washington, including the pharmacy and health insurance lobbies. The pharmaceuticals lobby has recently applied a significantly greater amount of pressure to the current Administration—with reports indicating that the Pharmaceutical Research and Manufacturers of America (PhRMA) increased their spending by 30% last year. Additionally, it was revealed this week that Novartis made $1.2 million in consulting fee payments to a company owned by President Trump’s personal lawyer, Michael Cohen.

Meanwhile, earlier today Mr Azar, Scott Gottlieb, MD, Commissioner of the FDA, and Seema Verma, MPH, Administrator of the CMS, outlined a four-part plan at the HHS to help bring down the costs of drugs in the United States.

The four-part plan includes programs to increase competition in drug markets, update Medicare Part D with better tools to negotiate drug prices, develop better incentives for drugmakers to decrease list prices, and programs to lower out of pocket spending.

President Trump closed his speech by hinting that his executive actions will be followed up in the coming weeks with legislation from Congress to further help bring down drug prices. For example, he promised during his speech to repeal “the pharmacist gag rule, which bans pharmacists from telling patients how to save money.”

“We will not rest until this job of unfair pricing is a total victory for everyone in the USA,” he concluded.

—David Costill

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