Trump’s Budget Proposal Swings At Drug Prices With A Glancing Blow

President Donald Trump's new budget proposal flirts with combating high prescription medication prices, but industry watchers say the tweaks to Medicare and Medicaid do little more than dance round the edges of decreasing the actual prices of drugs.

The White House's proposal, which comes after Congress passed a two-year spending deal a week ago, though, sets a dark tone for the administration's concentrate on prescription medications.

“Drug costs are a populist problem for the president,” and he's made it clear to his staff that progress must be made this year, said Dan Mendelson, president of Avalere Health, a health care consulting firm.

The proposal targets vast amounts of drug spending cuts in the federal Medicare program, which provides health care for about 60 million people age 65 and older or much younger patients with disabilities, and alters drug spending in Medicaid's safety-net program for pretty much 70 million Americans.

And the sheer size the government government's Medicare and Medicaid programs means any drug pricing tweaks which do get made are meaningful – simply not necessarily groundbreaking.

“The main question is, how far could they be actually going to get in coping with the actual problem?” said Paul Van de Water, who spent nearly two decades in the Congressional Budget Office and is now a senior fellow at the Center on Budget and Policy Priorities. The majority of the proposals for Medicare, for instance, move money around instead of force decreased prices, Van de Water said.

Alex Azar, the newly appointed secretary of Health and Human Services, said the proposed budget props up work his agency has already been doing to lessen the high cost of prescriptions, “especially for America's seniors.”

Just last month, the former Eli Lilly executive told Congress throughout his confirmation hearings that “all drug prices are too high within this country.”

Highlights from the proposals include:

Trump entered office with blustering offers to bring drug prices “way down.” But critics have charged that the White House did not engage Congress on cost-cutting ideas, and that a leaked draft of the executive order last summer read just like a wish list for that industry.

With the brand new budget, the administration is attempting to recast that narrative at a time when Republicans in Congress might be willing to compromise.

“Americans want Washington to reduce prescription medication prices, and our paper provides policy options that would make drugs more available to Americans, today and in the near future,” wrote D.J. Nordquist, chief of staff for that president's Council of Economic Advisers, within an email late Friday after the council released a 28-page report on reforming drug prices.

The CEA paper and also the president's budget seriously the heels of Congress passing a spending pact Friday which includes a big help to Medicare enrollees in the expense of the pharmaceutical industry. Your budget proposes closing the doughnut hole in 2021, last year than expected.

Republicans “just showed a propensity to sort of undertake the,” said Jayson Slotnik, an insurance policy consultant and partner at Health Policy Strategies. And there's political upside for doing more since Republicans are concerned relating to this year's November midterm elections approaching, Slotnik said: “They can run and [say] it is something they have accomplished.”

Yet James Love, director of the nonprofit Knowledge Ecology International, said Trump's proposals are not “insightful or original” and, talking about the council's report, said it “could happen to be written by PhRMA,” the powerful D.C. lobbying firm for pharmaceutical manufacturers.

PhRMA released an argument late Monday applauding the supply to pass through on rebates to Medicare beneficiaries but additionally raising concerns about other elements from the budget proposal, saying they'd “limit use of innovative medicines.”

Experts from the academic and think-tank world said the district has seen a number of these policies before. For example, the rebate and discount pass-through proposal is a topic of discussion inside the Centers for Medicare & Medicaid Services for more than a year and is already within the rulemaking process.

Another proposal that lowers reimbursement for Medicare Part B drugs that are a new comer to this program is similar to an Obama-era pilot that never got off the floor.

Tara O'Neill Hayes, who focuses on health policy in the conservative American Action Forum, said several Medicare proposals were also similar to those found in a June 2021 report by the Medicare Payment Advisory Commission. If all the Medicare proposals took effect – including one which calls for more flexibility in drug formularies – O'Neill Hayes said overall premiums may go up slightly for those Part D beneficiaries, but that would be offset by lowering out-of-pocket payments for that beneficiaries using the highest drug costs.

“You're likely to have winners and losers,” she said. “The real winners listed here are the incredibly high-cost patients.”

Trump's budget requires hospitals to provide a minimum level of charity choose to have an additional payment adjustment underneath the 340B program, which requires pharmaceutical manufacturers to supply drugs at steep discounts to hospitals and clinics having a high ratio of low-income patients.

The administration lowered reimbursement amounts for hospitals earlier this year, and Mendelson at Avalere said he expects more changes.

In reviewing Trump's budget and also the council report, Allan Coukell, senior director of health programs at the Pew Charitable Trusts, said several of the proposals “have the possibility to lessen out-of-pocket costs, several have the potential to increase competition within the programs and/or move people toward less expensive drugs. None from it changes the general trajectory” of rising sticker prices.