Login to Your Account



Trump takes swipe at drug pricing fix with new blueprint

web_pic_may_14_2018.jpg

By Michael Fitzhugh
Staff Writer

High prescription drug prices took center stage in Washington Friday as President Trump touted "the most sweeping action in history to lower the price of prescription drugs for the American people," in a focused speech. Trump pledged "tougher negotiation, more competition and much lower prices at the pharmacy counter," as well as an elimination of middlemen, who he said "won't be so rich anymore."

"It's been a complicated process, but not too complicated," he quipped, alluding to comments he made last year that drew mockery from policy wonks for its lack of appreciation for just how difficult systemic reforms can be. The administration will also take on what Trump called "one of the biggest obstacles to affordable medicine: the tangled web of special interests," which he said contributed millions of dollars to maintaining the status quo.

Familiar in its themes and rhetoric, the speech touched on everything from privatization to patent laws, while spotlighting plans to kill "gag rules" affecting pharmacists and to "demand fairness overseas" where Trump said foreign governments "extort unreasonably low prices from U.S. drugmakers," putting the onus of subsidizing R&D costs squarely on Americans.

Alongside the speech, the Department of Health and Human Services (HHS) rolled out the American Patients First plan, framed as a blueprint for progress toward realizing the president's pledge, pull-quoted for emphasis, that "prices will come down."

The report, previewed in a posting to the White House website and Fox News ahead of the speech, touts plans for action on "four major problems:" high list prices, lack of negotiating tools for seniors and government programs, high out-of-pocket costs, and foreign governments that, according to the preview "freeload off of American innovation." In response, HHS is proposing to work for improved competition, better negotiation, incentives for lower list prices and lower out-of-pocket costs.

Some of the actions the department plans are expected to have near-immediate force, while others will take more work.

On the competition front, some of the highlights include plans for immediate steps to prevent drug manufacturers from gaming regulatory processes, such as using risk evaluation and management strategies, and to look for ways to encourage sharing of samples needed for generic drug development.

In an effort to improve its negotiating position, some of the actions the department envisions are experimentation with value-based purchasing in federal programs and reforming Medicare Part D to give plan sponsors significantly more power when negotiating with manufacturers. It will also create a report for the president evaluating whether lower prices on some Medicare Part B drugs could be negotiated by Part D plans.

Incentives for lower list prices will include an FDA evaluation of rules that would require manufacturers to list drug prices in advertising and, later, taking measures to restrict the use of rebates, which the president identified as a major contributor to high list prices. Efforts to lower out-of-pocket costs will include prohibiting rules preventing pharmacists from telling patients when they could pay less out-of-pocket by not using insurance.

David Hyman, a professor at the Georgetown Law Center, called the HHS document "an extensive and impressive list," suggesting that the administration is taking the issue of high drugs prices "very seriously."

But he also noted what was not in the proposal: "You don't see re-importation of branded drugs, direct negotiation or a ban on rebates within the PBM market, though there are efforts to make them more transparent and improve the integrity of the process," he said.

Missives previewing the administration's plans and echoing familiar rejections of the status quo rolled out ahead of the speech. In a posting to the White House website and Fox News ahead of the speech, HHS Secretary Alex Azar, FDA Commissioner Scott Gottlieb, and Centers for Medicare & Medicaid Services administrator Seema Verma called high drug pricing "a threat to the financial security of far too many."

Democrats also took aim at the issue, calling for action against perceived price gouging, the elimination of restrictions on Medicare negotiating power, and rules that would require notifying HHS at least a month ahead of significant drug price increases with justification for the hike.

But, whether parts of the administration's new proposals requiring congressional actions – mostly within the realm of competition and negotiation – can gain traction remains uncertain. "It'd be nice if there was bipartisan congressional support to take sensible steps to reduce drug pricing, but politics obviously complicate matters," Hyman said.

Industry reaction mostly positive

Biotechnology Innovation Organization President and CEO Jim Greenwood said that his group – a representative of companies that have some of the most to lose from deep systemic reform – looked forward to working with the administration, though harbored "concerns that some of the ideas proposed today could, if adopted, hurt patient access to the medicines" and the development of future cures and treatments.

CVS Health Corp., a pharmacy benefit manager, released a statement saying that policies to lower drug prices for consumers and reduce out-of-pocket costs are "aligned" with its business model "and would not be expected to have a negative impact on profitability." The sentiment seemed to assuage investors in the company, which saw its shares (NYSE:CVS) rise by about 3.2 percent to close at $64.41 on Friday.

Shares of Express Scripts Holding Co. (NYSE:ESRX) also rose, climbing about 2.6 percent to close at $72.80 on Friday, as the company struck a populist tone in a statement saying that it "stands up to drug companies and drug stores to make sure that everyone – patients, employers, health plans, unions and public programs – get a fair deal for the money they spend."

Concern about industry profits among investors, at least initially, also seemed largely absent. Shares of the Nasdaq Biotechnology Index (Nasdaq:NBI) rose about 2.7 percent by day's end, while the shares of the SPDR S&P Pharmaceuticals ETF rose by about the same percentage.