Trump Outlines Plan to Lower Drug Prices
Posted May 11, 2018 6:44 p.m. EDT
WASHINGTON — President Donald Trump vowed on Friday to “derail the gravy train for special interests” as he outlined what he called a comprehensive strategy to lower the cost of prescription drugs by promoting competition and pressing foreign countries to raise their drug prices to alleviate pressure on American consumers.
But he dropped the popular and populist proposals of his presidential campaign, opting not to have the federal government negotiate lower drug prices for Medicare or allow American consumers to import low-cost prescriptions from abroad.
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 consumers who need medicine to extend or improve their lives.
“Everyone involved in the broken system — the drugmakers, insurance companies, distributors, pharmacy benefit managers and many others — contribute to the problem,” he said in a speech in the Rose Garden. “Government has also been part of the problem because previous leaders turned a blind eye to this incredible abuse. But under this administration we are putting American patients first.”
But his proposals hardly put a scare into that system. Ronny Gal, a securities analyst at Sanford C. Bernstein & Co., said the president’s speech was “very, very positive to pharma,” and he added, “We have not seen anything about that speech which should concern investors” in the pharmaceutical industry.
Drugmakers’ stocks jumped immediately after the speech, as did the stocks of pharmacy benefit managers, the “middlemen” who Trump said had gotten “very, very rich.” The NASDAQ Biotechnology Index climbed 2.68 percent Friday, and companies that make expensive specialty drugs saw their stocks rise, including Vertex Pharmaceuticals and Biogen. Pharmacy benefit managers Express Scripts closed up by 2.59 percent, and CVS Health finished up at 3.17 percent.
Rather than take aim at the pharmaceutical makers, Trump said his administration would cut out the middleman, provide new tools to private benefits managers in Medicare’s prescription drug program to negotiate lower prices, stop limiting pharmacists from helping patients save money and speed up approval of over-the-counter medicines so fewer will require prescriptions.
He also directed his trade representative to make it a priority to stop foreign countries from forcing American drugmakers to provide medicines at drastically lower prices than in the United States. “It’s time to end the global freeloading once and for all,” Trump said.
Trump’s plan includes ideas that experts say could help lower drug prices.
“It’s framed as a pro-competitive agenda, and touches on a range of government programs that the administration can change through regulation — so that the president can take unilateral action,” said Daniel N. Mendelson, the president of Avalere Health, a research and consulting company. “The trick here for the administration is to do something visible before the midterm elections, so they can take credit for an action that reduces drug prices for consumers.”
Republicans are eager to show an achievement on health care this year to counter arguments by Democrats who say that Americans are losing coverage because of Trump’s efforts to sabotage the Affordable Care Act.
Trump’s “blueprint to lower drug prices” has four main themes: increasing competition in drug markets; giving private plans more tools to negotiate discounts for Medicare beneficiaries; providing new incentives for drug manufacturers to reduce list prices; and cutting consumers’ out-of-pocket costs.
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. Patients could see savings at the pharmacy counter. At the same time, Medicare officials say, there could be a modest increase in premiums for Medicare drug coverage.
Health policy experts like this idea because it reduces the burden on patients with serious chronic illnesses and spreads the expense of needed medications across the entire insured population.
But Democrats jumped at the opportunity to push health care back to the center of the political debate.
“President Trump offered little more than window dressing to combat the rising cost of drugs — a problem that is pinching the pocketbook of far too many Americans,” said Sen. Chuck Schumer of New York, the Democratic leader. “We Democrats have offered a better deal on prescription drugs through true transparency, Medicare Part D negotiation, and a cop on the beat to police and stop exorbitant price hikes.”
They said Trump’s policy prescriptions fall far short of what is needed, especially next to the populist promises he made in the 2016 campaign.
“I think very expensive champagne will be popping in drug company boardrooms across the country tonight,” said Rep. Elijah E. Cummings, D-Md., who has been investigating drug prices for the last year. “The president is apparently abandoning his campaign promise to authorize Medicare to negotiate directly with drug companies to lower prices.”
Administration officials were somewhat defensive about the president’s plan, saying it was bold and significant even though it was not what Democrats wanted — or what candidate Trump embraced. In a round of television interviews on Friday morning, Alex M. Azar II, the secretary of health and human services, said the president’s plan included “over 50 different initiatives — very sophisticated, the kind of thing you’d expect from a CEO like Donald Trump, getting at the real heart of the business problem.”
Azar said on the Fox Business Network that the president’s plan would “unleash those who negotiate for us with the greater powers of the private sector” to obtain good deals.
In trade negotiations, the White House wants to put pressure on other countries to increase the prices of brand-name drugs, with the expectation that pharmaceutical companies would then lower prices here at home.
America’s trading partners “need to pay more because they’re using socialist price controls, market access controls, to get unfair pricing,” said Azar, a former top executive at the drugmaker Eli Lilly and Co. “And they’re doing it on the backs of their patients. God help you if you get cancer in some of these countries.”
Other nations, also struggling with high drug prices, scorned Trump’s advice on this issue.
“Drug manufacturers in the United States set their own prices, and that is not the norm elsewhere in the world,” a spokesman for the 28-member European Union said on Friday. “EU member states have government entities that either negotiate drug prices or decide not to cover drugs whose prices they deem excessive. No similar negotiating happens in the U.S.”
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.”