Trump seeks to base Medicare drug prices on lower overseas rates

Here's why drug prices are so high

Here's why drug prices are so high

Health Secretary Alex Azar said President Trump's bid to tie what the US government pays for certain Medicare drugs to what other nations pay won't cripple innovation or access to vital treatments, even if the plan is one of Big Pharma's "ultimate nightmares".

One common cancer drug is almost seven times as expensive for Medicare as it is for other countries.

Speaking from the Health and Human Services (HHS) Department in Washington Thursday, the president said foreign countries are paying practically nothing for drugs since their governments pay whatever drug companies set.

Rather than "divine the value" of a drug, the proposal "respects the fact that pharma voluntarily agreed to sell drugs at discounts elsewhere and we're saying 'give us some of that, '" Azar said at a briefing with reporters after Trump's speech.

"Same company. Same box".

An HHS report issued just prior to Thursday's announcement compared prices of 27 Part B drugs in the us with those of 16 other wealthy countries and found that prices charged by drugmakers to wholesalers and distributors (known as "ex-manufacturer prices") in the USA were 1.8 times the average worldwide ex-manufacturer price, in the first quarter of 2018.

Many large pharmas have limited exposure to Part B, which encompasses drugs administered in doctor's offices or hospital outpatient clinics.

KHN's coverage of prescription drug development, costs and pricing is supported in part by the Laura and John Arnold Foundation.

- Don't expect immediate rollbacks. That's the law also known as "Obamacare", which Trump is committed to repealing.

President Donald Trump tried Thursday to make good on a campaign vow to lower drug prices - attacking "foreign freeloaders" and proposing significant changes to how Medicare pays for many drugs.

Healthcare and high prescription drug prices have consistently polled as top voter concerns ahead of November 6 elections where Trump's Republicans are battling to maintain control of Congress.

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"More information is needed on the Administration's proposals, but policies that impose foreign government price controls in the USA health care system, reduce physician reimbursement for Part B medicines or insert middlemen between patients and their doctors could limit access to medicines and severely alter the market-based Part B program".

Drugmakers immediately protested, arguing the plan amounts to government price-setting. "These proposals are to the detriment of American patients", PhRMA President and CEO Stephen J. Ubl said. The administration's "American Patients First" blueprint for lowering drug prices, released in May, also proposed tackling what it calls "freeloading" by other countries.

Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges". The government health insurance program for the elderly and disabled covers more than 40 million Americans. But that's "quite literally the opposite of what is being proposed".

Trump's argument is that pharma companies use the higher prices from the USA to fund new research and development that other countries then receive, effectively benefitting from the highers costs for USA patients.

Democratic leaders on Capitol Hill were dismissive.

Trump added that doctors would be paid "a flat rate" regardless of the cost of medications that they prescribe in order to counter doctors he says who prescribe more expensive medications so they can earn a higher commission.

But PhRMA, the drug industry's main trade group, came out strongly against Thursday's proposal.

The program, which has been proposed as a pilot, would be implemented in about half the country and is expected to launch in late 2019 or early 2020, Azar explained at the press briefing on Thursday. Officials said they're seeking input on how to select the areas of the country that will take part in the new pricing system. "I don't think so", the secretary said of drug makers.

Before that visit, the department released a report that finds US prices for the top drugs administered in doctor's offices are almost twice as high as in foreign countries.

The proposed changes are related to the Medicare Part B program that pays for medications that patients receive in hospitals or in doctor's offices. In the past, Azar has taken aim at that particular piece of the program its spending has grown much faster than for drugs dispensed by pharmacies under Medicare's Part D program.

According to HHS's projections, if they come into effect, the rule would save $17.2 billion over five years. Beneficiaries would save through lower cost-sharing.

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