President Donald Trump's new pledge to hack down on “the global freeloading” in prescription medications were built with a feeling of déjà vu.
Five months ago, Trump unveiled a blueprint to deal with prohibitive drug prices, and the administration has been feverishly rolling out ideas which range from posting drug prices on television ads to changing the rebates that flow between drugmakers and industry middlemen.
Thursday, Trump proposed having Medicare base what it really pays for some expensive drugs around the average prices in other industrialized countries, for example France and Germany, where prices are much lower. The proposal is in the initial phases of rule-making and awaiting public comments.
The U.S., Trump said, will “confront one of the most unfair practices, almost unimaginable that it hasn't been looked after well before this.”
The proposal was met with hope and skepticism, with several experts saying these were happy the administration was dealing with Medicare Part B's rising drug prices but questioning its approach.
Walid Gellad, director from the Center for Pharmaceutical Policy and Prescribing in the University of Pittsburgh, said within an online post the administration's proposed solutions were unclear. And, he explained, they would “face insurmountable challenges.”
While some industry watchers pointed to the announcement like a political move, Wells Fargo pharmaceutical analyst David Maris asserted this is a broader effort by the president and his administration to fight the main reasons for high drug prices.
“The reality is he could effortlessly not take this on and do the other administrations did and let the prices keep rising.”
Trump, too, promised more to come and said he will soon announce “some stuff that will truly be tremendous.” On Friday, Health insurance and Human Services Secretary Alex Azar said that, as promised in the blueprint, there'd become more changes to Medicare Part D, which covers most prescriptions. Ian Spatz, a public policy expert and senior adviser at Manatt Health, said the overall blueprint was “unprecedented when it comes to the number of different ideas and areas of ideas it contained.”
Nothing would happen overnight. The proposal to require drug prices in TV ads might be delayed by litigation and notably, if implemented, does not include any penalties for businesses who neglect to post the prices.
The proposed rebate rule was delivered to work of Management and Budget in July. Matt Brow, president of industry consulting firm Avalere Health, said he expects the administration to write the rule for comment by year's end.
Trump's international pricing plan is not as far along because the rebate proposal. Rather, it is an “advanced notice of proposed rule-making.” The proposed rule could are available in spring 2021, and Azar said the brand new model could begin in late 2021 or early 2021.
Yet, on Friday, Azar signaled the proposal could change, telling an audience at the Brookings Institution the administration is “open to the quantity of alternative ideas.”
Avalere's Brow said there's a good chance the proposal will change significantly.
“The sweeping nature from the proposal makes the stakes higher and makes it harder to implement,” Brow said.
If the administration progresses, it might bypass Congress and implement an airplane pilot underneath the Center for Medicare & Medicaid Innovation's purview. The pilot would phase in over five years and affect 50 percent of the country. Azar said there would be no changes to Medicare benefits and no restrictions on patient access.
The proposal concentrates on drugs covered under Medicare Part B, which are administered in hospitals, clinics and doctors' offices. Additionally, it would alter the reimbursement formula for doctors and providers and would allow private-sector vendors to purchase drugs and then sell on them to doctors and hospitals. Medicare would reimburse those vendors in the international pricing level.
Currently, doctors and hospitals administering Part B drugs are reimbursed the typical cost of a drug plus 6 %. President Barack Obama's administration attempted to alter Medicare part b as well but drew intense lobbying opposition and eventually withdrew a proposed pilot project.
Allan Coukell, senior director for health programs at Pew Charitable Trusts, said removing incentives that reward doctors for getting costlier drugs and getting a different way to control prices “makes a lot of sense.” Drug spending within Medicare Medicare part b reached $22 billion in 2021, and drug costs have raised by typically 8.6 percent annually since 2007.
Stephen Ubl, president of the industry trade group Pharmaceutical Research and Manufacturers of America, or PhRMA, said imposing foreign price controls from countries with socialized health care systems would harm patients and hinder drug discovery and development.
Azar, an old executive at pharmaceutical manufacturer Eli Lilly, told reporters Thursday that “you may hear the tired talking points” this will affect innovation. He disputed that concept, concluding that “less than 1 percent of pharma [research and development] could potentially be influenced by this change.”