Trump plan for drug prices won't include direct negotiations

Speaking in the White House Rose Garden, Trump said the current system has been corrupted by greedy businesses and middlemen who have made "an absolute fortune" through "dishonest double-dealing" at the expense of USA consumers who need medicine to extend or improve their lives.

It said near-term actions would include giving commercial plans that administer Medicare Part D prescription drug benefits for seniors more power to negotiate prices with drugmakers. Many Republicans in Congress have also opposed leveraging Medicare's buying power against drugmakers. Trump's plan calls on providers in the 340B drug discount program to report on how they use the savings.

Many researchers say the biggest reason behind the rising spending is high prices for prescription drugs.

But others warn there is no guarantee that unraveling the current pricing-setting bureaucracy will lead to lower prices, because it all starts with drugmakers' initial prices.

"When foreign governments extort unreasonably low prices from US drugmakers, Americans have to pay more to subsidize the enormous cost of research and development".

- Banning a pharmacist "gag rule", which prevents druggists from telling customers when they can save money by paying cash instead of using their insurance. Other proposals include speeding the process of switching prescription drugs to over-the-counter medicines.

Along with the speech will be an outline of what the administration plans to do about them, as well as highlighting budget proposals that would make changes to how drugs are paid for under Medicare, which insures Americans who are 65 and older. "We're not calling for Medicare negotiation in the way that Democrats have called for", one of the senior officials told reporters Thursday night. Trump took aim at industry middlemen like pharmacy benefit managers, distributors and insurers, claiming they inflate drug prices. Pharmaceutical companies - and some insurers and employers - have increasingly lost patience with the opaque system and accuse PBMs of pocketing the rebates.

"Trump had a choice today: to seek disruptive fundamental reform or to embrace more incremental steps", wrote Terry Haines, a financial analyst, in an investment note.

Medicare is the largest purchaser of prescription drugs in the nation, covering 60 million seniors and Americans with disabilities, but it is barred by law from directly negotiating lower prices with drugmakers. Bill Cassidy, R-Louisiana, who's called for a number of the policies on prescription drugs the Trump administration is now planning on implementing.

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

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". HHS Secretary Alex Azar, who also spoke Friday, seemed to warn that some of these changes would take time. "In some cases, medicine that costs a few dollars in a foreign country costs hundreds of dollars in America, for the same pill with the same ingredients in the same package made in the same plant, and that is unacceptable", Trump said.

The plan went on to float some "even bolder actions" that the Department of Health and Human Services said it is reviewing and seeking feedback on.

Some more substantive changes are contemplated by the blueprint, although the document didn't lay out any concrete steps for how to achieve them.

"A lot of what they focus in on is not really the price of pharmaceuticals, as much as the out-of-pocket payments of the patients at the pharmacy", said Craig Garthwaite, an associate professor of strategy at Northwestern University's Kellogg School of Management. "I don't want to overpromise that somehow by Monday there's going to be a radical change, but there's a deep commitment to structural change". He said that there would also be a request for information on ideas to lower drug prices.

Perhaps the only notable deviation from ideas already hinted at in prior speeches by officials was a call for the FDA to evaluate whether direct-to-consumer drug advertising should include list prices. He believes it's something the United States should do.

Drugmakers generally can charge as much as the market will bear because the US government doesn't regulate medicine prices, unlike most other developed countries.

But he dropped the popular proposals of his campaign, opting not to have the federal government directly negotiate lower drug prices for Medicare.

Health care stocks were volatile during Trump's speech, with shares of companies involved in the pharmaceutical supply chain, such as Express Scripts Holding Co and CVS Health Corp, hitting session lows.

The group's chief executive, Stephen Ubl, said in a statement that some Trump proposals could help patients afford their medicines, but "others would disrupt coverage and limit patients' access to innovative treatments".

  • Tracy Klein