Ways Trump's Drug Price Plan Could Lower Rx Costs

Larry Hoffman
May 12, 2018

In announcing proposals to let Medicare enrollees share some of the drug discounts and rebates obtained by health insurers, Trump backed off from his campaign ideas of allowing Medicare to negotiate directly with drugmakers for volume discounts, or allowing consumers to buy cheap imports.

The president plans to provide a blueprint that lays out the framework of how he will reduce drug costs, according to senior administration officials. "We need a vital and vibrant generic industry and generic drug market", he said. This information reaches prescribers through an innovative e-prescribing system that can be utilized at the point of prescribing and at the pharmacy counter to quickly and seamlessly evaluate individual prescription savings opportunities in real time, saving patients up to $75 per prescription.

Mr. Trump promised while campaigning to attack high prescription-drug prices and he now faces mounting criticism from Democrats for not doing enough.

Even Trump's tough talk about going after other nations that negotiate lower prices for their citizens - which the president labeled "free loading" - was accompanied only by instructions to his trade negotiators to raise this issue in talks with US trading partners. "However, it is really disturbing that the blueprint released today does not address the Medicare sequester cut to drug payments that is fueling higher costs and cancer drug prices".

Ronny Gal, a securities analyst at Sanford C. Bernstein & Co., said the president's speech was "very, very positive to pharma". "Don't be fooled: President Trump and his administration are bought and paid for by Big Pharma".

Administration Officers, such as Overall Health and Human Solutions Secretary Alex Azar, Meals and Drug Administration Commissioner Scott Gottlieb and also Facilities for Medicare and Medicaid Providers Administrator Seema Verma have teased Trump's priorities lately.

It will instead focus on increasing private competition to lower pharmacy costs for consumers.

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.

The result, in part, is the highest drug prices in the world. The agency said it is adopting policies "to reduce gaming of statutory and regulatory requirements to help ensure that drug companies don't use anticompetitive strategies to delay development and approval of important generic drugs". "Right now, the incentive is for the drug company to have [a high list price] and negotiate rebates [from that]".

Dr. Mitchell Levine, the chairman of Canada's Patented Medicine Prices Review Board, which reviews prices to ensure they are not excessive, said in an interview, "With our price regulations, drug companies are still making profits - just lower profits than in the United States".

The administration would lower out-of-pocket costs for Medicare patients by requiring prescription drug plans to pass on some of the discounts and rebates they receive from drug manufacturers.

The president also spoke of ending trade practices overseas that lead to unfair prices for Americans.

Health policy experts, however, question whether the administration's moves will have a meaningful impact on the high cost of prescriptions.

"The pricing mechanisms are arcane, and they're not easily understandable, and there are a lot of different prices along the way - and different people touching the drug at different places in the system", said Dan Mendelson, president of Avalere Health.

Through its more than 9,800 retail locations, more than 1,100 walk-in medical clinics, a leading pharmacy benefits manager with approximately 94 million plan members, a dedicated senior pharmacy care business serving more than one million patients per year, expanding specialty pharmacy services, and a leading stand-alone Medicare Part D prescription drug plan, the company enables people, businesses and communities to manage health in more affordable and effective ways. Drug companies, however, have lobbied hard to prevent government involvement, and Republicans have generally not supported such a proposal.

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