Drug prices trump addresses costs in speech friday electricity transformer health risks

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The Department of Health & Human Services will take "a range of immediate actions" to implement the blueprint, according to a fact sheet provided by the White House on Thursday. The administration will also seek feedback on other potential policies.

Among the steps Trump and Azar mentioned Friday were ending the drug industry’s so-called gag orders of pharmacists, which prevent them from discussing cheaper options with consumers, speeding up the approval of over-the-counter medications and asking the Food & Drug Administration to require manufacturers to include prices in their TV ads.

"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 packaging, made in the same plant," Trump said. "It’s unfair and it’s ridiculous, and it’s not going to happen any longer."

Industry and consumer groups largely supported the president’s efforts to tackle drug costs. Pharmacy benefit managers, which manage drug coverage and negotiate discounts for insurers, took the opportunity to tout their efforts to control costs. Others, including those representing insurers, physicians, pharmacists and hospitals, blamed drugmakers for the problem.

"AARP also strongly believes that it is critical that any proposals to lower prescription drug costs don’t simply shift the costs around in the health care system without addressing the root problem: the prices set by pharmaceutical companies," said Nancy LeaMond, AARP’s chief advocacy and engagement officer.

There are some promising ideas in Trump’s plan, such as reining in pharmacy benefit managers, said Peter Bach, a physician who runs Memorial Sloan Kettering’s drug pricing lab. But he doesn’t see much point in trying to change drug prices in other counties.

Trump has long promised to bring down the cost of drugs and has blasted drugmakers, but Friday’s speech was the first time he addressed it at length. His administration has made several moves, though experts have said they mainly tinker around the edges of the problem.

During Trump’s tenure, administration officials have provided some insights into how they intend to address the cost of prescription medicines. The White House has made recommendations in the president’s budget request and in a report issued by the White House Council of Economic Advisers.

Among the proposed strategies listed on the fact sheet is allowing insurers in Medicare’s Part D drug plans "greater flexibility … to encourage better price negotiation." Officials said Thursday they would get "government rules out of the way that are preventing seniors from getting better deals."

Many health policy experts and consumer advocates say that the federal government could use its heft to negotiate much lower prices for the more than 57 million Americans in the Medicare program, rather than having insurers that provide Medicare Part D prescription coverage wring discounts from manufacturers. Drug companies, however, have lobbied hard to prevent government involvement, and Republicans have generally not supported such a proposal.

"These include the high list prices set by manufacturers, seniors and government programs overpaying for drugs due to [a] lack of the latest negotiating tools, rising out-of-pocket costs for consumers, and foreign governments free-riding off of American investment in innovation," Azar said in an address before the American Hospital Association on Wednesday. He noted that the agency will build on proposals in the president’s budget, but said Trump "wants to go much, much further."

Some of the administration’s efforts will seek to lower what consumers or the federal government pay at the pharmacy or to a provider, which some policy experts argue does little to affect the source of the problem: the high list prices of medications. Few expect the president to try to regulate what manufacturers charge for their drugs.

One area in the Trump administration’s sights is the shadowy world of drug price rebates. Insurers often receive big discounts for pricey, brand-name drugs from manufacturers. These concessions are usually negotiated by pharmacy benefit managers, who keep part of the rebate and pass the rest to insurers.

Seema Verma, the administrator of the Centers for Medicare & Medicaid Services, recently called rebates a "convoluted system," noting that they allow manufacturers to raise list prices. This, in turn, increases the amount of money insurers and pharmacy benefit managers collect in rebates, giving them no incentive to keep prices down.

"When prices go up, patient cost-sharing also goes up," she said in a speech before the American Hospital Association earlier this week. "We’ve all noticed the increase in the amount we have to pay at the pharmacy counter. For seniors who are sometimes on fixed incomes, the pain is real. This is not acceptable."

The president’s budget calls for insurers who provide Medicare Part D prescription drug plans to give at least one-third of the rebates and price concessions to beneficiaries at the pharmacy, according to Avalere, a health care consulting firm. The Centers for Medicare & Medicaid Services is reviewing comments on passing along rebates in Medicare plans.

The federal government currently pays providers 6% more than the average price of those medicines. This also gives manufactures the incentive to raise prices and gives providers the incentive to select more expensive medicines. Among the ideas under consideration by the Trump administration are moving Part B coverage into the Part D program, where insurers can better negotiate prices, and requiring manufacturers to provide more accurate sales data to make sure they don’t exclude discounts.

Reducing drug costs in Medicaid is also under consideration. The president’s budget calls for giving up to five states greater leeway to test drug coverage and payment models in their Medicaid programs. Allowing states to determine which drugs to cover would in theory allow them negotiate bigger discounts directly with manufacturers.

Currently, any medications a manufacturer includes in the federal Medicaid drug rebate program are automatically on the formulary. Some states negotiate supplemental discounts for certain drugs. But if states could decide which drugs were covered, they could theoretically obtain even lower prices .

Meanwhile, the Food & Drug Administration is focusing on reducing prices by increasing competition from generic drugs and so-called biosimilars, which are nearly identical to super-expensive biologic medicines. The agency has cleared a backlog of approvals for generic medications, and officials have spoken about tackling the "games" manufacturers play to keep competitors off the market, such as using loopholes to block rivals or paying them to delay bringing their drugs to market.

"The United States both conducts and finances much of the biopharmaceutical innovation that the world depends on, allowing foreign governments to enjoy bargain prices for such innovations," the council’s report said. "Simply put, other nations are free-riding, or taking unfair advantage of the United States’ progress in this area."