Trump announces plan to lower drug prices

Grant Boone
October 28, 2018

The Trump administration says it plans to change how Medicare pays for some expensive drugs for cancer and arthritis in a move to bring the costs more in line with the prices paid in European countries.

The speech focused on spending in the part of Medicare that pays for seniors who get drugs administered in a doctor's office. Trump gave a speech on Thursday at the Department of Health and Human Services in which he laid out his approach. During his speech, Trump cited an example of a "common" cancer drug that he says is seven times more expensive for Americans than for those living outside the United States, though he didn't name the drug specifically.

"Same company. Same box". He says Americans are now going to pay the prices other countries pay.

In an effort to control prescription drug prices, HHS is proposing a mandatory demonstration that would test a new Medicare reimbursement model for certain physician-administered drugs payable under Part B.

"For decades, other countries have rigged the system so that American patients are charged much more. for the exact same drug", Trump said at HHS headquarters Thursday.

In another twist, the plan is structured as an experiment through a Medicare innovation center empowered to seek savings by the Affordable Care Act.

Also, Trump's Justice Department is seeking to invalidate the health reform law's provisions governing pre-existing conditions as part of lawsuit being brought by 20 Republican states. In the United Kingdom, for example, a drug company will go to the National Institute for Health and Care Excellence, or NICE, offering confidential discounts or rebates off of a drug's list price.

Under a proposal announced by the Department of Health and Human Services, payment for certain drugs administered in doctors' offices would shift to a level based on global prices.

Having companies known as pharmacy-benefit managers negotiate for lower drug prices in the way they now do in Part D plans, which cover the prescription drugs you pick up at a pharmacy.

Drugmakers immediately protested, arguing the plan amounts to government price-setting. In his remarks Thursday, he combined that with a swipe at foreign trade practices, framing the Medicare proposal as a way to restore fairness for American healthcare consumers.

The administration's new proposal would gradually decrease reimbursement for physician-administered drugs over five years until the USA pays 126 percent of what a selection of other nations pay.

Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges".

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US residents pay more than patients an all other high-income countries for medications, according to a 2017 study by the Commonwealth Fund. But that's "quite literally the opposite of what is being proposed". They may use group purchasing organizations to negotiate and secure lower prices.

Democratic leaders on Capitol Hill were dismissive.

"Overall, the prices for Part B drugs in America exceed the prices paid in countries with similar economic conditions".

"The world reaps the benefits of American genius and innovation, while American citizens, and especially our great seniors who are hit the hardest pick up the tab", Trump said.

The program, which has been proposed as a pilot, would be implemented in about half the country and is expected to launch in late 2019 or early 2020, Azar explained at the press briefing on Thursday.

But that's not how HHS Secretary Alex Azar tells the story.

Trump's announcement on drug prices came hours after HHS released a report highlighting the steep spending by the USA government on prescription drugs. That includes Juul, which controls more than 70 percent of the market.

The 19-page report looks specifically at drugs purchased and dispensed by doctors themselves under Medicare's Part B program.

Azar said Medicare spent about $8 billion more for drugs in the study than it would have if the prices were scaled to worldwide prices.

The HHS said the plan would save American taxpayers and patients $17.2 billion and would cause total payment for the affected drugs to drop by 30 percent. Beneficiaries would save through lower cost-sharing.

Changing up the incentives for doctors, so they're paid based on a flat fee rather than a percentage of the price of a drug, as a way to push them to use lowe- cost drug options. However, HHS officials said the plan is designed so it would not cut into doctors' reimbursements. Matt Brow, president of industry consulting firm Avalere Health, said he expects the administration to publish the rule for comment by year's end. "There is more coming".

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