Why Trump's Plan Isn't a Cure for High Drug Prices
Health Care

Why Trump's Plan Isn't a Cure for High Drug Prices


President Trump on Friday delivered a long-awaited speech outlining his administration’s blueprint for lowering prescription drug prices. Calling his plan “the most sweeping action in history to lower the price of prescription drug for the American people,” Trump promised “tougher negotiation, more competition and much lower prices at the pharmacy counter.”

Overall, Trump emphasized how businesses all across the pharmaceutical supply chain, from drugmakers to insurers to the pharmacy benefits manager “middlemen” and the government, are hurting Americans who take prescription drugs. And, in keeping with the blueprint’s title, “American Patients First,” the president called for other developed countries to pay more for medicines.

“When foreign governments extort unreasonably low prices from U.S. drugmakers, Americans have to pay more to subsidize the enormous cost of research and development. In some cases, medicine that costs a few dollars in a foreign country costs hundreds of dollars in America, for the same pill with the same ingredients in the same package made in the same plant, and that is unacceptable,” Trump said. “It’s time to end the global freeloading once and for all.”

The blueprint is centered on four broad strategies:

• Increasing competition in drug markets. The administration says it will look to advance generic drugs and biosimilars to promote price competition and will “take steps to end the gaming of regulatory and patent processes by drug makers to unfairly protect monopolies.”

• Better negotiation, including tools for Medicare Part D plans to negotiate for discounts.

• Creating incentives for drugmakers to lower list prices, including having the Food and Drug Administration evaluate the idea of requiring manufacturers to cite list prices in their advertising. The plan also calls for streamlining and speeding up the approval process for over-the-counter drugs.

• Reducing out-of-pocket costs for patients. The administration would, for one example, stop limiting pharmacists’ ability to tell Medicare Part D patients when they could pay less by not using insurance. And it would require prescription drug plans for Medicare patients to pass on some of the discounts and rebates they receive from pharmaceutical companies. “Health policy experts like this idea because it reduces the burden on patients with serious chronic illnesses and spreads the expense of needed medications across the entire insured population,” The New York Times said.

Why Trump's Plan Isn't a Cure

Health care analysts and observers were — well, lets’ just say underwhelmed by Trump’s presentation, with many saying that the details of the blueprint didn’t live up to the president’s tough talk. Notably absent from the plan, for example, was the idea of allowing Medicare to negotiate lower drug prices directly, which Trump had promised during his election campaign. The blueprint also does not call for allowing Americans to import cheaper drugs from foreign countries.

Here’s an overview of the drug-pricing problem and the Trump administration’s proposals:

The Problem: Americans spend more on prescription drugs — more than $1,100 per person, on average, in 2015 — than anyone else in the world. Drug prices here are high and have been rising rapidly, with patients who pay out of pocket for brand name drugs especially vulnerable to crushing costs.

As a Political Issue, This Has Plenty of Potential: The vast majority of Americans say that drug prices are too high and that the pharmaceutical industry has too much sway in Washington. And in a new poll released Thursday by the Kaiser Family Foundation, 66 percent of Republicans, 72 percent of independents and 78 percent of Democrats said they would be more likely to vote for a candidate vowing to lower prescription drug costs.

But This Might Be About Politics More Than Results: “The president's tough talk on drug prices will no doubt be popular with the public. Will the fact that the specifics of the plan don't seem to deliver on that tough talk ultimately matter?” Larry Levitt of the Kaiser Family Foundation asked on Twitter.

Trump’s Plan Includes Plenty of Steps He Can Take Without Congress: “It’s framed as a pro-competitive agenda, and touches on a range of government programs that the administration can change through regulation — so that the president can take unilateral action,” Daniel N. Mendelson, the president of research consultancy Avalere Health, told The New York Times.

But It Seems to Have More Questions Than Answers: A number of health care experts noted that the 44-page blueprint includes dozens and dozens of questions. “A lot of good questions in the plan but very little actual action, especially against PBMs,” Walid Gellad, who heads the Center for Pharmaceutical Policy and Prescribing at the University of Pittsburgh, tweeted.

Raising Drug Prices in Other Countries Won’t Help Here: “There’s not a sensible health economist alive, or any economist, that will tell you that higher prices abroad will lead to lower prices here,” Andrea Harris, senior vice president of health care at Height Capital Markets in Washington, told Bloomberg.

Ultimately, the Plan Could Have a Very Limited Effect: “This is not doing anything to fundamentally change the drug supply chain or the drug pricing system," Gerard Anderson, a health policy professor at Johns Hopkins University, told CNN before the blueprint’s release.

And the Pharmaceutical Industry Doesn’t Seem Too Worried: Just check out how pharma stocks — and those of pharmacy benefit managers like Express Scripts — shot higher despite Trump’s harsh rhetoric.

But Big Pharma Should Still Be On Notice: “The industry is among the most profitable of any industry in the U.S. and as such probably has room to give,” Wells Fargo analyst David Maris told Bloomberg. “If it doesn’t reform itself, it will be reformed and this is the beginning of that reform.”

Did We Really Expect Anything Else from Trump? “I'm shocked!” tweeted Michael Linden of the liberal Roosevelt Institute. “You mean the guy who just gave drug companies a massive tax cut and then appointed a drug CEO as HHS secretary and has spent his entire time as president favoring the rich and powerful, that guy wasn't genuine about lowering drug prices? Shocked.”