Trump Administration Defends Plan to Lower Prescription Drug Prices
Posted May 14, 2018 9:15 p.m. EDT
WASHINGTON — The Trump administration hit back Monday against critics of President Donald Trump’s plan to reduce prescription drug prices, saying his ideas would be far more effective than remedies championed by Democrats.
Democrats have long supported two proposals Trump endorsed during the 2016 presidential campaign. The government, they say, should directly negotiate with drug manufacturers to obtain lower prices for Medicare beneficiaries. And consumers, they say, should be allowed to import pills from Canada and certain other developed countries where brand-name drugs often cost less.
In a speech Monday, the secretary of health and human services dismissed those solutions, which Trump backed away from when he announced his plan Friday, as quack remedies.
“The only way that direct negotiation could possibly save money is by doing something this administration doesn’t believe in: denying access to certain medicines for all Medicare beneficiaries through rationing, or setting prices for drugs by government fiat,” said the secretary, Alex M. Azar II. “We don’t believe either of these proposals would put American patients first. They would move us toward the kind of socialized medicine systems that have such a notorious reputation for poor quality and access.”
In the past couple years, federal officials have approved new drugs costing hundreds of thousands of dollars, and scientists say more are on the way. Azar said the government could drive down the prices of such treatments by shifting their coverage from one part of Medicare to another.
These drugs, including many cancer medications, are typically administered in doctors’ offices or hospital outpatient departments under Part B of Medicare, which pays the average sales price with a 6 percent markup. Azar said he wanted to move some of the drugs to Part D of Medicare, which contracts with private health insurance companies to manage the benefit and negotiate discounts with drugmakers.
This change, he said, could save billions of dollars because “there is currently no negotiation at all” on drug prices under Part B of Medicare.
Azar also suggested that it was time to re-examine certain consumer protections adopted by the George W. Bush administration in 2005 to ensure that Medicare beneficiaries would have access to “all or substantially all drugs” in six treatment categories.
“Part D spends about $30 billion a year on these drugs,” Azar said. “That’s almost 10 percent of what our entire country spends on drugs each year. Yet Part D plans are hamstrung by current rules from really negotiating over drugs in these protected classes, allowing pharma to run up huge profits on patients who desperately need these often expensive drugs.”
Drugmakers have little incentive to negotiate when they know that Medicare’s prescription drug plans must cover almost all drugs in the six “protected classes”: antidepressants; antipsychotic medicines, used to treat schizophrenia and certain related disorders; immunosuppressant drugs, to prevent rejection of organ transplants; anti-epilepsy drugs; antiretrovirals, used in treating HIV/AIDS; and many cancer drugs.
In January 2014, the Obama administration proposed rolling back protections for the first three categories. The administration withdrew the proposal two months later, after a torrent of criticism from patients, pharmaceutical companies and members of Congress of both parties.
Azar said the Trump administration wanted to give Medicare drug plans the same tools used by commercial insurers to manage the use of prescription drugs. “These are the same techniques and approaches used for tens and tens — I dare say over 100 million Americans” with commercial insurance, he said.
Drugmakers said Trump’s plans for far-reaching changes in Medicare were misguided. The changes “could disrupt care and raise costs for Medicare beneficiaries,” jeopardizing their access to needed medicines, said Robert E. Zirkelbach, a spokesman for the Pharmaceutical Research and Manufacturers of America, an industry lobbying group.
Trump’s “blueprint to lower drug prices” incorporates a number of legislative proposals included in his 2019 budget request. But Azar said he did not need to wait for Congress.
As secretary, he said, he can use his pen — “a very powerful pen” — to authorize demonstration projects, waivers and experiments to bring down drug prices.
Azar’s vow recalled the strategy President Barack Obama pursued in his last three years in office. “I’ve got a pen and I’ve got a phone — and I can use that pen to sign executive orders and take executive actions and administrative actions that move the ball forward,” Obama said.
Many of Obama’s actions have been reversed by the Trump administration.
In another move to reduce prices, Azar said, the Trump administration will publicly “call out” brand-name drugmakers that try to stifle competition by refusing to provide samples of their products to generic drug companies.
Generic drug developers need the samples to show that a low-cost generic copy is equivalent to a brand-name medicine and can therefore be approved by the Food and Drug Administration without the extensive clinical studies that might otherwise be required.
"We know that certain brand-name manufacturers are abusing the system by blocking access to samples,” Azar said, and the FDA will identify “drug companies suspected of engaging in these abusive practices."
Whether such tactics violate the law in any specific case is often a complex question. Mylan, a generic drug company, filed an antitrust suit against Celgene in 2014, asserting that Celgene had maintained monopolies over two of its blockbuster cancer drugs by refusing to share samples. A federal court is still sifting through the factual and legal issues.