Trump Drug Pricing Plan Outlines Rule Changes Pharma Can Live With

Trump Drug Pricing Plan Outlines Rule Changes Pharma Can Live With
May 14, 2018

After months of expectations and repeated delays, President Donald Trump formally announced his strategy for making prescription medicines more affordable and accessible in the United States. Trump promised to take on the “tangled web of special interests” that drive up drug prices, noting the high amount that pharma companies spend on lobbyists to “protect the status quo” and “keep drug prices high.” 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.

Despite the rhetoric, Trump’s proposals stopped short of giving the government authority to negotiate Medicare drug prices or liberalizing curbs on drug imports, policies strongly opposed by pharma. The sigh of relief could be heard throughout industry and the investment community, providing a lift for industry stock prices. 

Instead, a main initiative unveiled by Trump on May 11 was proposed to compel other industrial nations to pay more for innovative medicines, particularly Canada, Japan, and some European countries. Under the “American Patients First” blueprint, the administration will challenge “global freeloading” through actions that reduce price disparities and spread the burden for incentivizing new drug development between the US and other developed nations. Although it’s unclear how the Trump administration will achieve this goal, one idea is to publish a comparison of drug prices in the US and other Organization for Economic Co-operation and Development (OECD) countries to expose the differences. The President also called for the US trade representative to address this “injustice” in trade discussion with all trading partners.

A main component of the Blueprint is to reduce Medicare and Medicaid spending on drugs, as changes in government programs can be accomplished by administrative action. Multiple policy changes aim to bring more competition to Medicare Part D plans and to revise reimbursement under Part B. But instead of authorizing the federal government to negotiate Medicare drug prices directly, as urged by Democrats and many consumer representatives, the White House aims to reduce prices and out-of-pocket costs for beneficiaries through greater transparency in Medicare list prices and rebates, limiting price increases on Part B drugs, encouraging greater generic-drug use by low-income seniors, and returning to Medicare beneficiaries those rebates negotiated by pharmacy benefit managers (PBMs) and manufacturers. One new proposal is to examine whether drugs that raise prices too often or too much can remain in the protected classes of Part D plans.

Ad disclosures

One newer idea outlined by Health and Human Services (HHS) secretary Alex Azar is to promote drug price competition by requiring drug marketers to include pricing information in DTC broadcast ads. “If we want to have a real market for drugs, why not have them disclose their prices in the ads?” Azar queried. That, he said, would give consumers more balanced information, and companies would face “a very different set of incentives for setting their prices.” Azar wants FDA to look at whether it can require disclosure of list prices as part of “fair balance” requirements. Implementing such a program, though, raises many questions about what pricing data would be disclosed and under what authority.

President Trump also praised FDA for promoting competition in drug markets by approving a record number of new generic drugs, as emphasized over the past year by commissioner Scott Gottlieb. The White House plan further supports FDA policies for developing more complex generic dosage forms and for deterring brand firms from blocking generic-drug makers from access to innovator products needed for bioequivalence testing. Similarly, the administration supports efforts to streamline and accelerate the approval process for over-the-counter drugs to further boost market competition.

Azar said that there would be a close look at the current drug rebating system involving pharmacy benefit managers (PBMs), manufacturers, and health plans and how rebates affect PBM compensation. And the HHS secretary wants to get rid of “gag rules” that limit how pharmacists can steer customers to less costly products, and to require doctors to disclose out-of-pocket costs for drugs they prescribe for patients.

Democrats demand more

Meanwhile, leading Congressional Democrats offered more aggressive proposals for lowering drug prices, most requiring legislative action. The top priority is to permit Medicare to use its purchasing power to negotiate prices directly with plans and manufacturers. 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 designed 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.

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. And they propose to appoint a “price gouging” czar with authority to fine drug companies for raising prices beyond certain limits.

Azar noted that many of the Blueprint proposals can be accomplished through executive action, but that change may take some time if new rulemaking is required. The administration seeks “fundamental structural change” to a system of “entrenched market players,” he commented in a press briefing. This announcement, he said, should launch a national dialogue with all stakeholders and with Congress.

 

 

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