Trump's plan to bring down drug prices spares pharmaceutical industry

13 May, 2018, 00:27 | Author: Gregory Stephens
  • President Donald Trump speaks during a roundtable discussion on tax reform at the Cleveland Public Auditorium in Cleveland Ohio U.S

Health and Human Services Secretary Alex Azar said during a White House briefing that numerous actions the government was considering would not require the US Congress, but could take place through executive action within months.

A majority of Americans say passing laws to bring down prescription drug prices should be a "top priority" for Trump and Congress, according to recent polling by the Kaiser Family Foundation.

"Finally, as we demand fairness for American patients at home we will also demand fairness overseas. America will not be cheated any longer, and especially will not be cheated by foreign countries", the President added.

"There are no major surprises, it spares the pharmaceutical industry of the reform that they most vehemently oppose", a pharmaceutical lobbyist told BioPharma Dive in an interview following the Trump speech. He repeated those words at a Cabinet meeting in October.

And though Trump used sweeping rhetoric to attack drug makers, insurers and others he said were fleecing patients, his plan committed to few concrete actions that would immediately challenge industry. He also promised to make it more expensive for "free-riding" foreign countries to produce drugs, arguing that they take advantage of US manufacturers' research and development. "They're setting prices in other countries and we're not".

The drug industry's top lobbying arm, Pharmaceutical Research and Manufacturers of America, spent almost $26 million to sway federal decision makers previous year, according to records tallied by the nonprofit Center for Responsive Politics. "We are not going to reward companies that constantly raise prices, which in the past has been most companies". Those changes include a maximum limit on out-of-pocket costs that would help people on very-high-priced specialty drugs. "When foreign governments extort unreasonably low prices from USA drug makers, Americans have to pay more to subsidize the enormous cost of research and development", he said.

But the White House plan largely drops some of the most aggressive, populist attacks Trump proposed on the campaign trail, mostly sparing the pharmaceutical industry he previously accused of "getting away with murder".

Public outrage 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 hikes around 10 percent annually. "I think very expensive champagne will be popping in drug company boardrooms across the country tonight", said Rep. Elijah Cummings, a Maryland Democrat. The administration officials did not specify particular policies, but in his budget, Trump proposed changes to Medicare benefits.

Azar and other Trump officials have described the problem in stark terms and promised bold action. Nor does it allow Americans to buy lower-priced drugs from overseas.

One novel proposal in the president's grab bag is meant to actually raise prices - not in the USA, but in other developed countries.

The blueprint, which echoes numerous ideas first put forward in Trump's FY 2019 proposed budget and the White House Council of Economic Advisers drug pricing report, focuses on four areas: lowering high list prices set by manufacturers; equipping government and private payers with new tools to negotiate prices; lowering out-of-pocket costs for consumers and taking steps to stop other countries from "freeloading" off of American innovation.

Trump's proposals did not include direct negotiations by Medicare, a strategy long embraced by Democrats and by Trump during the campaign. This, in turn, increases the amount of money insurers and pharmacy benefit managers collect in rebates, giving them no incentive to keep prices down.

"This is a major restructuring of a huge portion of the USA economy". That compares with $756 for Canada and $497 for the United Kingdom, both of which have government measures to control drug prices.

Since Trump took office, most of the action on drug pricing has come from the Food and Drug Administration, which has gone about as far as it legally can on the issue by pushing for greater competition in drug markets. One prong in the administration's attack on high drug prices is to stop anticompetitive practices by drugmakers.

Drugmakers argue that list prices do not reflect actual cost after discounts and rebates. Those price concessions are nearly never disclosed and it's unclear what portion actually flows back to consumers. The rebates, which are negotiated in secret by a middleman industry called pharmacy benefit managers (PBMs), are not considered kickbacks under current law. Another proposal would do away with rebates altogether to encourage more upfront discounts in Medicare. Individual companies and industry groups endorsed the administration's overall message of lowering prices while spinning the speech to support their interests. It's also silent on the regulatory requirements that put costly burdens on generic manufacturers to generate data, Klasmeier said.



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