
Trump Offers Blueprint to Drive Down Prescription Drug Prices; Targets Rebates, "Middlemen"
Out-of-pocket costs for consumers and targeting the complex pharmaceutical rebating system were the high points of a presentation that began in the Rose Garden and ended with HHS Secretary Alex Azar's details in the White House press room.
In a Rose Garden ceremony, President Donald Trump vowed to go after the “middlemen” and offered a plan that could put drug prices in TV ads, as part of his quest to drive down what Americans spend on prescription drugs, something he promised to do as a candidate.
However, it’s the details outlined afterward by HHS Secretary Alex Azar that could bring far-reaching changes to the pharmaceutical industry and the healthcare system, including an end to the complex system of rebates that Azar said sometimes allows pharmacy benefit managers (PBMs) to be paid from both health plans and drug makers. This must stop, Azar said, and the payment system must be replaced with one that lowers prices for consumers at the pharmacy counter.
“We’re laying out the most complete action plan for drug affordability in our history,” he said.
Meanwhile, the president who once said
President Trump’s speech, titled, “
Just ahead of the speech, a letter outlining the “blueprint” appeared from Azar; FDA Commissioner Scott Gottlieb, MD; and CMS Administrator Seema Verma, which said:
- HHS will increase competition in the drug markets
- Medicare Part D will gain new tools to negotiate discounts for seniors
- Manufacturers will gain new incentives to lower list prices
- The administration will act to reduce consumers’ out-of-pocket (OOP) spending
Azar said while some of the items will require Congress to act, many can be done administratively and are not interdependent. He was clear that fixing the pricing system will take time. “It took decades to erect this complex, interwoven system,” he said.
A request for information will seek to untangle information about rebates, which are a key target of the initiative. Gottlieb has spent weeks talking about the secrecy that the surrounds the system of discounts that manufacturers pay PBMs to maintain favorable positions on formulary; for years, the payments were largely used to hold down premium but in recent weeks Optum, which is owned by UnitedHealthcare, announced plans to pass discounts directly to consumers. Azar, the former president of Eli Lilly, said because rebates are tied to the compensation structure of PBMs, the current pricing system works against a drug company that wants to cut costs at the pharmacy counter. “What goes on now is frankly a bit of a game,” he said.
Increasing competition. To increase the number of generic and biosimilar options, the blueprint calls for ending loopholes that allow manufacturers to prevent generic competitors to reach the market, and to continue Gottlieb’s efforts to promote competition in the biologics market. Trump specifically praised Gottlieb, and then added that “we are very much eliminating the middlemen. The middlemen became very, very rich. They won’t be so rich any more.”
Shortly after the speech, PBM Express Scripts, which provides drugs to 83 million patients, said it “looked forward” to working with the administration to increase the availability of generic drugs and to eliminate gag clauses at the pharmacy counter. “President Trump rightly recognizes drug companies charge way too much, and their prices need to come down. … By taking on tough challenges, we helped employers save $32 billion on their prescription drug bill in 2017 alone.”
Medicare Part D changes. The blueprint outlines how HHS seeks to allow health plans that administer Medicare Part D plans to gain authority to manage high cost drugs that do not currently have rebates or negotiated fixed prices, including those currently in protected classes. In a White House press availability after Trump’s speech, Azar outlined plans to give health plans that administer Part D the flexibility to negotiate with drug makers on prices—or whether to offer certain drugs—and then let seniors decide whether to select plans based on what they offer. CMS would also give Part D plans flexibility to respond to price increases for sole source generics, and similar negotiating tools would be extended to drugs paid for by Medicare Part B. Azar also said that protected class status might be tied to a drug’s cost being held stable for an extended period, perhaps 18 months.
Stephen J. Ubl, president and CEO of the Pharmaceutical Research and Manufacturers of American (PhRMA), reacted negatively to the proposals for Medicare Part D and especially for Part B. He said in a statement, "These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, ohters would disrupt coverage and limit patients' access to innovative treatments."
Effect of foreign drug prices. In recent weeks, conservative business leaders, such as Steve Forbes, have called for the Trump administration to take
There was no mention of importing drugs, something Democrats have called for in recent days. Besides direct Medicare negotiations, candidate Trump laid out
Reducing OOP costs. The blueprint and Azar both call for ending gag rules for pharmacists and giving patients more information about low-cost alternatives, and getting patients more information about true co-pay costs before they are prescribed drugs. Azar said, for example, a patient should know before he has an infusion with a $300 co-pay if a self-administered drug is available for a $20 co-pay.
Scope of the pricing problem. Since taking office, these ideas have stalled, notes
Meanwhile, research
Other commentators weighing in ahead of the speech said that focusing on “greed” misses the real problem: the enormous waste associated with research and development failures that must be absorbed into the costs of drugs that succeed. Writing for Endpoints, David Grainger of RxCelerate said some pharmaceutical punching bags—notably Gilead’s Sovaldi to cure hepatitis C virus—are unfairly held up for scorn when they save money in the long run, by reducing hospitalization.
Trump’s speech comes more than a year into his term, as critics say he has done little to follow through on his promise to get tough on drug companies and bring relief for consumers at the pharmacy counter. Recently, the team under Azar has gelled around the pricing issue in way that did not occur under predecessor Tom Price, MD. Gottlieb is the
“Today is an important day in the administration’s collaborative effort to address the rising cost of drugs,” Gottlieb said in a statement. “We know that the high list cost of drugs can adversely impact peoples’ access to medicines. People rely on medicines to improve their quality of life, manage chronic conditions and treat life-threatening illnesses. Access to prescription drugs is a matter of public health. I applaud President Trump for making this one of the administration’s priorities and introducing a bold plan that puts patients first in advancing actions to address the rising list prices of prescription medicines. The FDA shares the goal of ensuring that American patients have access to quality and affordable care that meets their needs. This is why we’re prioritizing actions to encourage the timely development and approval of generics and biosimilars.”
Verma, meanwhile, has won some praise from
Verma’s statement “is not supported by any data,” said Ted Okon, MBA, executive director of the Community Oncology Association (COA), in an interview with The American Journal of Managed Care®. “It comes at a time when community oncology is doing so much to support payment reform.”
Okon said the administration’s chief concern should be the proposed mergers of CVS and Aetna, as well as Cigna and Express Scripts, which would cause higher prices through increased vertical integration in the healthcare system. “History has told us with greater consolidation you have higher costs,” he said. Despite promises of savings through better coordination, “that never happens.”
In a statement after the speech, a COA statement said the group was dismayed that the plan did not call for an end to the 2% sequester; in the 6 years since the sequester took effect, 135 cancer treatment centers have closed.
Widespread reaction. Reaction was diverse, from physicians to advocates for openness in prescriptions. The Alliance for Transparent and Affordable Prescriptions (ATAP) said, “ATAP is pleased that President Trump addressed the pharmacy benefit manager (PBM) problem, and the rebate system specifically, in his speech today on drug prices. For far too long these invisible middlemen have wreaked havoc on the country’s drug pricing system and interfered with the medical treatment of an untold number of Americans.”
David O. Barbe, MD, president of the American Medical Association (AMA), said, “The AMA is pleased the Trump administration is moving forward with its effort to address seemingly arbitrary pricing for prescription drugs. Physicians see the impact of skyrocketing prices every day as patients are often unable to afford the most medically appropriate medications—even those that have effectively controlled their medical condition for years,” he said. “No one can understand the logic behind the high and fluctuating prices. We hope the administration can bring some transparency — and relief – to patients.”
Several Democrats also weighed in, including Representative Ron Wyden, D-Oregon. “Asking other countries to fatten Big Pharma’s wallet and expecting them to lower prices for American families is laughable—just look at the Trump tax law,” he said.
Said Representative Frank Pallone, D-New Jersey, “After promising to take on the drug industry and lower costs, today’s proposal is an empty gesture that will not meaningfully reduce the cost of prescription drugs for everyday families.” If Trump were serious, Pallone said, he would advocate direct negotiations for Medicare.
Also weighing in was Steven D. Pearson, MD, president of the Institute for Economic Review (ICER). The group's analysis of cardiovascular results for alirocumab (Praluent) recently laid the groundwork for a price break negotiated between Express Scripts and drugmakers Sanofi and Regeneron. Said Pearson: "While encouraged to see both political parties evaluating new options to reform drug reimbursement, we continue to believe the fundamental challenge in the US pharmaceutical system is that--particularly in areas with little competition--a drug's price rarely reflects the benefit for patients. There are times when our country receives tremendous value from medicine and other times when we're getting ripped off, and our healthcare system struggles to tell the difference."
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