National News

Trump to Drop Call for Medicare to Negotiate Lower Drug Prices

Posted May 10, 2018 8:49 p.m. EDT

WASHINGTON — President Donald Trump will lay out Friday a broad strategy to reduce prescription drug prices, but in a break from one of his most popular campaign promises, he will not call for Medicare to negotiate lower prices with drug manufacturers, senior administration officials said.

The White House will issue a blueprint that represents “the most comprehensive plan to tackle prescription drug affordability of any president,” a senior official told journalists Thursday night.

Asked if the plan would include direct negotiations by Medicare, the official said, “No, we are talking about something different.”

“We are not calling for Medicare negotiation in the way that Democrats have called for,” the official said later. “We clearly want to make important changes that will dramatically improve the way negotiation takes place inside the Medicare program.”

As he campaigned for the presidency, Trump boldly broke with his party and embraced a long-standing Democratic proposal when he called for the federal government to use its buying power to negotiate lower drug prices for Medicare recipients. The proposal was popular with voters but not with other Republican politicians, who had been battling it for years.

Under Part D of Medicare, millions of older Americans receive insurance coverage for prescription drugs. The benefit is delivered entirely by private entities under contract with Medicare. These private entities — insurance companies and the middlemen known as pharmacy benefit managers — negotiate prices with drugmakers. But under a 2003 law, the federal government “may not interfere” in those negotiations.

The president’s plan will make it easier for private plans to negotiate “better deals for our seniors, especially for high-cost medications,” said the senior administration official, who spoke on the condition that he would not be named. The official refused to provide details, which he said would be disclosed Friday.

Congressional Democrats said they would like to work with Trump on plans to rein in drug costs, but they predicted that his proposals would be inadequate.

“On the campaign trail, he spoke like a populist,” Senate Democratic leader Sen. Chuck Schumer of New York said Thursday, in advance of the president’s speech. “He talked the talk, but he has failed — at least so far — to walk the walk.”

Trump plans to speak in the Rose Garden of the White House to an audience that includes members of Congress and patients who have suffered because of high drug costs.

The theme of the president’s initiative is “American patients first,” and his plan takes aim at what the White House calls “foreign freeloading.” The administration will, as expected, put pressure on foreign countries to relax drug price controls, in the belief that pharmaceutical companies can then lower prices in the United States.

“Other countries use socialized health care to command unfairly low prices from U.S. drugmakers,” said a summary provided by the White House on Thursday. “This places the burden of financing drug development largely on American patients and taxpayers, subsidizes foreign consumers, and reduces innovation and the development of new treatments.”

The U.S. spends well over $300 billion a year on prescription drugs sold at pharmacies and other retail outlets, and Medicare and Medicaid account for nearly 40 percent of that spending, according to the Department of Health and Human Services.

Trump plans to criticize brand-name drug manufacturers for setting high list prices and for trying to stifle competition by delaying the marketing of lower-cost generic drugs. He is also expected to criticize pharmacy benefit managers, saying they profit from rebates paid by drug companies but do not pass on much of the savings to patients.

Trump has repeatedly said that drug companies are “getting away with murder.”

In his State of the Union address in January, he said that “fixing the injustice of high drug prices” was one of his top priorities for 2018. “And prices will come down substantially,” he said. “Watch.”

As a presidential candidate, Trump supported two ideas that are anathema to the pharmaceutical industry: allowing Medicare officials to negotiate prices and allowing consumers to import prescription drugs from Canada and certain other countries where brand-name drug prices are generally lower than in the United States.

But top administration officials, like Alex M. Azar II, the secretary of health and human services, and Dr. Scott Gottlieb, the commissioner of the Food and Drug Administration, strenuously oppose those ideas. Republicans argue that the federal government has such overwhelming power as a buyer that it could basically set a price that manufacturers would have to comply with.

And since taking office, Trump has not endorsed such proposals.

Azar, testifying on Capitol Hill on Thursday, diagnosed the problem this way: “Prescription drug costs in our country are too high. List prices are too high. Seniors and government programs are overpaying due to lack of negotiating tools. Out-of-pocket costs are too high. And foreign governments are freeloading off of our investments in innovation.” Democrats are driving for a more aggressive approach. Rep. Peter Welch, D-Vt., said: “We acknowledge that drug companies make life-extending and pain-relieving drugs, and that’s a good thing. But the price gouging is killing patients.” Consumers, he said, are being “held hostage to the pricing power of Big Pharma.”

The Food and Drug Administration approved 1,027 generic drugs last year, a record number, and nearly 90 percent of prescriptions are filled with generic medicines, for which consumers often pay less than $25.

But increasing numbers of costly new brand-name drugs are also entering the market. Some provide highly effective treatments for some forms of cancer and other diseases. But the prices sometimes exceed $100,000 a year, and even patients with health insurance may be responsible for tens of thousands of dollars in copayments.