President Trump complained that the major pharmaceutical companies are “getting away with murder” and vowed to crack down on soaring drug prices that are draining the pockets of consumers and the coffers of Medicare and other federal health care programs.
Trump has not unveiled a concrete plan for addressing the problem, although, during the campaign, he proposed allowing the importation of cheaper drugs from Canada to enhance competition. He also favors allowing Medicare officials to negotiate prices with the major drug companies by eliminating the non-negotiating ban.
“I’m going to bring down drug prices,” Trump said in an interview with Time magazine that rattled the pharmaceutical industry. “I don’t like what’s happened with drug prices.”
Perhaps even more worrisome for PhRMA and its long-time GOP allies on Capitol Hill is that Trump has begun conferring with a prominent senior House Democrat who has waged war with the drug companies for years and co-sponsored one of the toughest price control bills in Congress.
Rep. Elijah E. Cummings of Maryland, the senior Democrat on the House Oversight and Government Reform Committee, teamed up with Sen. Bernie Sanders (IT) last year to highlight the most outrageous examples of price gouging and to fuel an election-year drive for congressional intervention. They called for harsher penalties and sanctions for price fixing, greater transparency in companies’ marketing strategies, and opening the borders to cheaper drugs from overseas.
Trump told Cummings at the inaugural luncheon at the Capitol last Friday that the two needed to meet to discuss the high cost of prescription drugs, according to media reports confirmed by the congressman’s spokesman. Then Trump called Cummings on Wednesday morning to briefly confer about runaway drug prices and what could be done to rein them in.
The Pharmaceutical Research & Manufacturers of America (PhRMA), the drug industry’s main trade group, recently told the Fiscal Times that “Government mandates and interventions are not the solutions for patients.”
Yet the fact that Trump spoke directly with Cummings twice in less than a week about drug prices suggests that the new president is getting ready to jettison traditional GOP opposition to direct government action, as The Hill noted this week.
Prescription drug prices have risen at a double-digit rate in recent years and are projected to continue to rise at that clip this year. The overall cost of all drugs prescribed for employees under age 65 is expected to grow by 11.6 percent in 2017, according to HR Consultancy Segal. Specialty drugs for treating cancer, the Hepatitis-C virus and other life-threatening diseases are projected to increase 18.7 percent.
The country has been treated to a rogue’s gallery of price gouging pharmaceutical companies over the past two years. Those include Mylan Pharmaceutical, maker of the EpiPen drug dispenser for allergic children; Gilead Sciences, a manufacturer of two biometric wonder drugs for treating the Hepatitis-C virus, and Turing Pharmaceutical, formerly headed by Martin Shkreli, the notorious hedge fund manager.
Cummings could not be reached for comment on Thursday about his conversations with Trump. However, if Trump is interested in pursuing the Democrats’ ideas for bringing down costs, Cummings and Sanders have provided a road map that in some ways overlaps with Trump’s own ideas.
Their Prescription Drug Affordability Act introduced in late 2015 has four main components:
- It would authorize the Secretary of Health and Human Services to negotiate drug prices with pharmaceutical companies to bring down costs for Medicare drug benefits and lift that prohibition from 2003 Medicare Part D law.
- That prohibition provided major pharmaceutical companies with billions of dollars in windfall profits that Cummings and Sanders want to end. Some analysts say Medicare could save more than a half trillion dollars over the coming decade by tough negotiations with drug companies. Trump would clearly be in favor of such a move.
- It would provide for much tougher penalties for drug companies that commit fraud in pricing their products. In recent years, many major pharmaceutical companies have been convicted of civil or criminal fraud but treated their fines and settlements as the cost of doing business. The bill would significantly increase fines and other penalties for wrongdoing. Trump hasn’t spoken out on this yet.
- It would prohibit the practice of brand-name drug makers paying competitors to keep lower-priced generic substitutes off the market to avoid competition and enable them to freely raise prices. The Federal Trade Commission has estimated that this so called “pay-for-delay” practice is costing consumers and taxpayers about $3.5 billion a year in higher drug prices.
Under the Cummings-Sanders approach, a drug company convicted of such fraudulent activities would lose its market exclusivity on the drugs they sell. Presumably, the government would pave the way for the introduction of a generic brand alternative. This, too, is not part of Trump’s approach so far.
- Finally, the bill would allow individuals, pharmacists and wholesalers to import prescription drugs from licensed Canadian pharmacies where drug prices are 40 percent lower per person than they are in the U.S. Trump frequently mentioned this approach throughout the campaign.
Joseph Antos, a health care expert with the conservative leaning American Enterprise Institute, said on Thursday, “Clearly the traditional Republican stance on government price controls is negative,” he said in an interview. “Anything that the White House might want to do with regards to price controls would almost certainly run through legislation.”
In early February, Cummings lectured Shkreli, the former CEO of Turing Pharmaceuticals, over his decision to boost the price of Daraprim, a drug that had been on the market for years to treat a rare parasitic disease, by over 5000 percent. "Drug company executives are lining their pockets at the expense of some of the most vulnerable families in our nation," Cummings said, while Shkreli smirked. "It's not funny, Mr. Shkreli. People are dying, and they're getting sicker and sicker."
Cummings, 66, a highly regarded veteran House member, told Business Insider, “I have absolutely no problem with companies making a reasonable profit. Nor do I have an issue with them being able to recover their R&D. But there comes a point here where price hikes have nothing to do with R&D and have nothing to do with reasonable profit.”
“I think companies that are doing the right thing ought to be joining me in looking for the Shkrelis of the world,” he added. “They ought to be screaming at the top of their lungs because what it does is it gives the entire industry a bad image.”