Published: Sat, May 12, 2018
Global Media | By Derrick Guzman

Trump's plan to bring down drug prices spares pharmaceutical industry

Trump's plan to bring down drug prices spares pharmaceutical industry

"Finally, as we demand fairness for American patients at home we will also demand fairness overseas".

Alex M. Azar II, the secretary of health and human services, said the Food and Drug Administration would explore requiring drug companies to disclose list prices in their TV advertisements.

Studies have demonstrated how the rising price of prescriptions has put a squeeze on American households.

"When prices go up, patient cost-sharing also goes up", she said in a speech before the American Hospital Association earlier this week.

"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".

But the White House plan largely drops some of the most aggressive, populist attacks Trump proposed on the campaign trail, mostly sparing the pharmaceutical industry he previously accused of "getting away with murder". He repeated those words at a Cabinet meeting in October.

Stock prices for several large drug companies rapidly increased in the hours after the address, an indication the industry does not expect major change to its business. Health policy specialists say the devil is in the details but point out that consumer effects could be highly variable depending on people's drugs, health plans and what other policy changes occur.

Critics say that proposal is unlikely to help lower prices here in the U.S. The result would be lower pharmacy costs for patients - a key Trump campaign promise. Industry experts have closely scrutinized the role that pharmacy benefit managers play in the pharmaceutical supply chain.


Public outrage over drug costs has been growing for years as Americans face pricing pressure from multiple sources: New medicines for life-threatening diseases often launch with prices exceeding $100,000 per year. And older drugs for common ailments like diabetes and asthma routinely see price hikes around 10 percent annually.

The generic drug lobby immediately praised Trump's speech.

Speaking in the White House Rose Garden, Trump said the current system has been corrupted by greedy businesses and middlemen who have made "an absolute fortune" through "dishonest double-dealing" at the expense of US consumers who need medicine to extend or improve their lives.

Still, administration officials ratcheted up the rhetoric ahead of Mr. Trump's speech.

Azar and other Trump officials have described the pricing problem in stark terms and promised bold action.

Members of Congress benefit heavily from the pharmaceutical industry's donations.

Some patient advocates have criticized the ability of drug companies to game the approval process, slowing the approval of cheaper, generic versions of their drugs.

Some of the administration's longer-term priorities include restricting use of rebates, creating incentives for drugmakers to lower list prices and investigating tools to address foreign government practices that it said could be harming innovation and driving up USA prices.


Drugmakers generally can charge as much as the market will bear because the USA government doesn't regulate medicine prices, unlike most other countries. Trump had met with House Democrats Elijah E. Cummings of Maryland and Peter Welch of Vermont in March 2017, when they said he readily backed their bill to give Medicare negotiating powers. Many Republicans in Congress have also opposed leveraging Medicare's buying power against drugmakers.

With no direct government price regulation, the primary check on prices comes from buyers in bulk - such as insurance companies and pharmacy benefit managers, which handle prescription coverage for insurers, employers and other big clients.

The U.S. spent $1,162 per person on prescription drugs in 2015, according to the Organization for Economic Cooperation and Development.

"This is a major restructuring of a huge portion of the USA economy". In 2015, the US spent $1,162 per person on pharmaceuticals, according to the Organization for Economic Cooperation and Development. "Drug manufacturers in the United States set their own prices, and that is not the norm elsewhere in the world", a spokesman for the 28-member European Union said on Friday.

"Our plan will end the dishonest double dealing that allows the middle man to pocket rebates and discounts that should be passed on to consumers and patients", Trump said, referring to distributors who buy drugs from directly from manufacturers and then mark them up dramatically before selling them to pharmacies. Those price concessions are nearly never disclosed and it's unclear what portion actually flows back to consumers.

Pharmaceutical investors and analysts expressed relief after the announcement, and shares of most top drugmakers rose Friday afternoon, including Pfizer, Johnson & Johnson and Eli Lilly. Another proposal would do away with rebates altogether to encourage more upfront discounts in Medicare. "At the same time, it is not clear at all how they are going to lower list prices".

Patents last longer in the USA than most countries, typically giving companies a dozen years of competition-free marketing after a drug launches. Site neutrality rules could also eliminate differences in inpatient and outpatient Medicare payment policies for drugs.


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