President Trump Addresses Need for More Competition, Lower Drug Costs

President Trump Addresses Need for More Competition, Lower Drug Costs

Many Republicans in Congress have also opposed leveraging Medicare's buying power against drugmakers. Democratic Rep. Lloyd Doggett of Texas dismissed Trump's plan as "a sugar-coated nothing pill".

Instead, administration officials are previewing a raft of old and new ideas to increase competition and improve transparency in the notoriously complex drug pricing system with the ultimate aim of wringing more savings for consumers. The measures aim to increase competition, create incentives for drugmakers to lower initial prices and stop foreign governments from "freeloading" off US pharmaceutical research.

The Medicare Rights Center, a nonprofit organization that advocates for affordable healthcare access for seniors, said earlier this year that it supports giving rebates to people on Medicare Part D who are experiencing higher drug costs.

But others warn there is no guarantee that unraveling the current pricing-setting bureaucracy will lead to lower prices, because it all starts with drugmakers' initial prices. The move includes an FDA evaluation of whether drug manufacturers should be required to list prices in their advertising, as well as longer-term efforts to change the imbalance between what U.S. consumers pay for drugs developed in the United States versus what foreigners pay in their own countries, where drug prices are often substantially lower. The plan also calls for streamlining and speeding up the approval process for over-the-counter drugs.

Those include requiring insurers to share rebates from drug companies with Medicare patients and changing the way Medicare pays for high-priced drugs administered at doctors' offices. It comes after more than a year of promises to tackle pharmacy costs that are squeezing millions of Americans.

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". Despite Trump's comments about "eliminating the middlemen", an apparent reference to PBMs, stocks of these companies also rose. Bill Cassidy, R-Louisiana, who's called for a number of the policies on prescription drugs the Trump administration is now planning on implementing.

Indeed, shares of several major drug and biotech companies rose immediately after the speech, as did the stocks of pharmacy-benefit managers, the "middlemen" Trump said had gotten "very, very rich".

Trump returned somewhat to his previous fiery rhetoric against the industry, accusing the drug lobby of making an "absolute fortune" at the expense of patients. They include Health Secretary Alex Azar, a former top executive at Eli Lilly and Co., who joined Trump for Friday's announcement. But the officials gave few specifics.

Azar later told reporters that the administration would "seek input" on doing away with drug rebates in the Medicare system to encourage more direct discounts.

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Some more substantive changes are contemplated by the blueprint, although the document didn't lay out any concrete steps for how to achieve them.

The rebates are rarely passed along to consumers, Azar said Friday, and jack up the fees middlemen charge. "I don't want to overpromise that somehow by Monday there's going to be a radical change, but there's a deep commitment to structural change". One prong in the administration's attack on high drug prices is to stop anticompetitive practices by drugmakers. Meanwhile Americans are paying more at the pharmacy counter due to health insurance plans that require them to shoulder more of their prescription costs.

The Pharmaceutical Research and Manufacturers of America, or PhRMA, praised the move but expressed concern about other proposed changes to Medicare.

In countries with centralized health care systems, including Canada, the United Kingdom, Japan and most nations in the European Union, a single entity negotiates on behalf of all the country's residents.

Trump's speech singled out foreign governments that "extort unreasonably low prices from USA drugmakers" using price controls and said US trade representatives would prioritize the issue in trade deals. The blueprint also does not call for allowing Americans to import cheaper drugs from foreign countries.

"It's hard to know why Germany or France or Australia would agree to something like that", said Professor Jack Hoadley of Georgetown University's Health Policy Institute.

Allowing Medicare to negotiate prices is unacceptable to the powerful drug lobby, which has spent tens of millions of dollars since Trump's inauguration to influence the Washington conversation around drug prices, including a high-profile TV advertising campaign portraying its scientists as medical trailblazers.

"What I'm hearing is that they're looking at a clean slate and going after everybody: the drug companies, the pharmacy benefit managers, everyone", said one health care lobbyist, who spoke on the condition of anonymity to speak frankly.

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