“We will see those prices go down, it will be a beautiful thing to watch.” President Donald J. Trump
In less than twenty-five minutes, President Donald J. Trump and Health and Human Services (“HHS”) Secretary Alex Azar provided their remarks on lowering drug prices. President Trump began by stating that his “administration is launching the most sweeping action in history to lower the price of prescription drugs for the American people.”
President Trump decried the “middle men” stating they “became very, very rich. Whoever those middle men were, a lot of people never figured it out, they’re rich. They won’t be so rich anymore.” He shifted to the “drug lobby” and said they were “making an absolute fortune at the expense of American consumers.” President Trump also targeted the pharmacy gag rule, which prohibits pharmacists from informing customers on how to money, stating it “is a total ripoff and we are ending it.” He derided how countries pay far less than the same drug offered here. “It’s unfair, it’s ridiculous, and it’s not going to happen any longer. It’s time to end the global freeloading once and for all,” exclaimed Trump. He then asked for HHS Secretary Azar to provide remarks.
“The President’s blueprint is a sophisticated approach in reforming and improving this unbelieving complex system.” HHS Secretary Azar
Secretary Azar began by explaining how Washington only talks. “The problem of high prescription drug costs is something that’s been talked about in Washington for a long time. But that’s all its been. Talk, talk, talk,” said Secretary Azar. He then highlight two examples of Trump’s plan: requiring drug prices to be disclosed for pharmaceutical advertisements and tougher negotiations for better deals with the industry. It should be noted that in June 2017, the American Medical Association (“AMA”) adopted this policy at its Annual Meeting. Following the remarks, a Press Briefing was held by Press Secretary Sarah Sanders and Secretary Azar. HHS Secretary explained that actions laid out within Trump’s blueprint “are steps that we can take using our regulatory authorities, especially with the power in the Medicare program.”
Trump’s Blueprint: American Patients First: The Trump Administration Blueprint to Lower Drug Prices and Reduce Out-of-Pocket Costs
The 44-page document is filled with a lot of talking points on how to address high drug prices, but ultimately Trump’s plan lacks specifics. HHS identified four challenges in the American drug market: (1) High list prices for drugs; (2) Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools; (3) High and rising out-of-pocket costs for consumers; and (4) Foreign governments free-riding off of American investment in innovation. To address these challenges, HHS identified four key strategies for reform: (1) Improved competition; (2) Better negotiation; (3) Incentives for lower list prices; and (4) Lowering out-of-pocket costs. HHS provided a high-level overview of “immediate actions” it may undertake to address the key strategies, as well as “further opportunities.”
Improved competition
Immediate Actions
- Steps to prevent manufacturer gaming of regulatory processes such as Risk Evaluation and Management Strategies (REMS)
- Measures to promote innovation and competition for biologics
- Developing proposals to stop Medicaid and Affordable Care Act programs from raising prices in the private market
Further Opportunities
- Considering how to encourage sharing of samples needed for generic drug development
- Additional efforts to promote the use of biosimilars
Better negotiation
Immediate Actions
- Experimenting with value-based purchasing in federal programs
- Allowing more substitution in Medicare Part D to address price increases for single-source generics
- Reforming Medicare Part D to give plan sponsors significantly more power when negotiating with manufacturers
- Sending a report to the President on whether lower prices on some Medicare Part B drugs could be negotiated for by Part D plans
- Leveraging the Competitive Acquisition Program in Part B
- Working across the Administration to assess the problem of foreign free-riding
Further Opportunities
- Considering further use of value-based purchasing in federal programs, including indication-based pricing and long-term financing
- Removing government impediments to value-based purchasing by private payers
- Requiring site neutrality in payment
- Evaluating the accuracy and usefulness of current national drug spending data
- Investigating tools to address foreign government threats of compulsory licensing or IP theft that may be harming innovation and development, driving up U.S. drug prices
Incentives for lower list prices
Immediate Actions
- FDA evaluation of requiring manufacturers to include list prices in advertising
- Updating Medicare’s drug-pricing dashboard to make price increases and generic competition more transparent
Further Opportunities
- Measures to restrict the use of rebates, including revisiting the safe harbor under the Anti- Kickback statute for drug rebates
- Additional reforms to the rebating system
- Using incentives to discourage manufacturer price increases for drugs used in Part B and Part D
- Considering fiduciary status for Pharmacy Benefit Managers (PBMs)
- Reforms to the Medicaid Drug Rebate Program
- Reforms to the 340B Drug Discount Program
- Considering changes to HHS regulations regarding drug copay discount cards
Lowering out-of-pocket costs
Immediate Actions
- Prohibiting Part D contracts from preventing pharmacists’ telling patients when they could pay less out-of-pocket by not using insurance
- Improving the usefulness of the Part D Explanation of Benefits statement by including information about drug price increases and lower cost alternatives
Further Opportunities
- More measures to inform Medicare Part B and D beneficiaries about lower-cost alternatives
- Providing better annual, or more frequent, information on costs to Part D beneficiaries
The full blueprint is available here. The White House also issued a corresponding Fact Sheet.
Reactions
Industry spokespersons presented a mixed reaction.
AMA: David O. Barbe, M.D., President, AMA, said “[t]he AMA is pleased the Trump administration is moving forward with its effort to address seemingly arbitrary pricing for prescription drugs. Physicians see the impact of skyrocketing prices every day as patients are often unable to afford the most medically appropriate medications—even those that have effectively controlled their medical condition for years. No one can understand the logic behind the high and fluctuating prices. We hope the administration can bring some transparency – and relief – to patients.” Read the full statement here.
PhRMA: Pharmaceutical Research and Manufacturers of America (“PhRMA”) president and CEO, Stephen J. Ubl, stated “[t]hese far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients’ access to innovative treatments.” Read the full statement here.
ACR: Dr. David Daikh, President of the American College of Rheumatology (“ACR”), stated ACR “agree[d] the President that drug prices in America are too high and action is long overdue. As the Administration explores sweeping changes to Medicare’s drug distribution system, including the role of pharmacy benefit managers, it is imperative that drug pricing reforms increase transparency, choice, and competition – and not penalize our patients by limiting their access to life-changing treatments.”