Trump assails high drug prices, avoids direct hit on industry

Clay Curtis
May 14, 2018

President Trump's much-anticipated speech on prescription drug prices on Friday contained plenty of anti-pharma rhetoric - but despite some concerns about proposed changes, shares in the sector rose in response to what were seen as largely hollow threats. He also cited supply chain middlemen for getting "very rich" under the current system and promised regulatory and legislative changes to address the status quo.

"The drug lobby is making an absolute fortune at the expense of American consumers", Trump said.

The federal government now pays providers 6% more than the average price of those medicines.

"The fundamental issues with prescription drug affordability are the high prices set by and marketing practices of pharmaceutical manufacturers, so we welcome the administration's focus on reducing drug costs", said UnitedHealth Group, which owns OptumRx, the third-largest PBM. The President also called for the USA trade representative to address this "injustice" in trade discussion with all trading partners.

Days after President Trump delivered a speech on prescription drug prices that was notably light on criticism of the pharmaceutical industry, his health secretary on Monday struck a far more aggressive tone, warning that the administration would be "turning on the pressure" on drug makers. One of the objectives of the plan is to reduce the prices by encouraging more robust price competition.

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In his remarks, Azar tore into a longstanding proposal - backed by numerous Democrats - to allow direct negotiation for Medicare's Part D program to help bring down drug prices. Generic drugs are copies of brand-name drugs and they are marketed after the brand-name drug's patent expires. The White House has committed to timelier generic drug reviews to reduce the cycles of review typically faced by generic applications. The process includes streamlining the process by which medicines are delivered to the patients from the pharmaceutical companies.

Statements made by the President were that "Everyone involved in the broken system - the drugmakers, insurance companies, distributions, pharmacy-benefit managers and many others - contribute to the problem", also adding that "Government has also been part of the problem because previous leaders turned a blind eye to this incredible abuse". "He is exhausted of the government getting bad deals on the drugs seniors need, and I couldn't agree more". Democrats also want more transparent calculation of the "true cost" of drug production as a basis for pricing, and they urge an end to tactics created to extend patent protections, such as pay-for-delay deals, patent "evergreening", and the use of FDA Risk Evaluation and Mitigation Strategies (REMS) to block competition.

In fact, Ubl said that medicine prices increased just 1.9% past year, below the rate of inflation, and yet patients' out-of-pocket costs continue to skyrocket.

Azar noted that numerous Blueprint proposals can be accomplished through executive action, but that change may take some time if new rulemaking is required.

There's the perennial call for "safe" importation of prescription drugs from other countries and revisions to trade agreements to encourage competition and access to affordable medicines. The president also pleased the industry by arguing that American drugmakers subsidize the cost of researching and developing new drugs, which other countries then take advantage of. Some states negotiate supplemental discounts for certain drugs. This announcement, he said, should launch a national dialogue with all stakeholders and with Congress.

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