Ahead of Midterms, Trump Unveils His Proposal to Slash Prescription Drug Costs

Published in Woonsocket Call on October 28, 2018

With mid-term elections looming, President Trump moves to block Democrats tying the high cost of prescription drugs to an unresponsive Republican-controlled Congress and to GOP efforts to undo health care protections for people with preexisting medical conditions, one of the most popular provisions of the Affordable Care Act, referred to as Obamacare.

According to recent Roll Call poll, health care is a top issue for Democratic and Independent voters in key battle ground states while the GOP tout’s immigration and the economy and jobs as its priority.

Last Thursday, afternoon, at the Department of Health and Human Services (HHS) with Secretary Alex Aza, FDA Commissioner Scott Gottlieb and CMS Administrator Seem Verman standing by President Trump, he announced major changes as to how Medicare pays for prescription drug to bring down costs by making prescribed medications more affordable to seniors, making pricing of U.S. drugs fairer relative to costs paid by other countries.

Bringing Down Medicare’s Skyrocketing Drug Costs

“We’re taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country,” said Trump at the Oct. 25 press conference in his 14-minute speech. He noted that the costs for the same pharmaceutical drug in some countries are 20 percent less than those purchased in the United States even though it was made by the same manufacturing company.

“At long last, the drug companies and foreign countries will be held accountable for how they rigged the system against American consumers,” says Trump.

Trump rattled off specific examples of how Medicare pays higher prices for the same pharmaceutical drugs that are cheaper in other developed countries. For instance, one eye medication that prevents blindness would annually cost about $187 million rather than $1 billion dollars if Medicare paid the same prices other countries pay, he said.

Another example, a highly used and very effective cancer drug is nearly seven times as expensive for Medicare as it is for other countries, said Trump, noting that “this happens because the government pays whatever price the drug companies set without any negotiation whatsoever.”

Under Trump’s unveiled proposal, a new Medicare model, the International Pricing Index (IPI), is created to bring down Medicare drug costs to ensure seniors get a “more fair deal on the discounts drug companies voluntarily give to other countries.”

Currently, Medicare sets payments for physician-administered drugs at the average sales price in the U.S. market—plus a price-based add-on fee. Trump’s proposal would allow Medicare to set the payment of these drugs at a Target Price, based on the discounts drug companies give other countries. With the model fully implemented, it is estimated that total payment for these drugs would drop by 30 percent.

Under the IPI model, described in an Advance Notice of Proposed Rulemaking, Medicare’s payments for select physician-administered drugs would shift to a level more closely aligned with prices in other countries. Overall savings for American taxpayers and patients is projected to total $17.2 billion, with out-of-pocket savings potentially totaling $3.4 billion over five years.

Medicare beneficiaries not covered by the IPI model could also see their drug costs lowered, because the average price used to calculate traditional Medicare reimbursement will drop.

Trump’s drug pricing proposal still needs to be refined and put though a federal rule-making process and its impact may not be seen for years.

Is Trump’s Efforts to Lower Drug Costs Just Election Year Posturing?

“It’s hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election when they have repeatedly advocated for and implemented policies that strip away protections for people with pre-existing conditions and lead to increased health care costs for millions of Americans,” says U.S. Senate Minority Leader Chuck E. Schumer in a statement.

“Once again, the President’s plan doesn’t go far enough to bring down the costs of prescription drugs. Democrats have proposed letting the HHS Secretary negotiate the prices of all drugs covered under Medicare, as well as new tools to ensure transparency and accountability when companies try to raise their prices. Without these critical steps, the President’s plan is just more words with little substance,” says Rhode Island Congressman David N. Cicilline.

Pharmaceutical Research and Manufacturers of America (PhRMA) president and CEO Stephen J. Ubl, opposes Trump’s proposal to lower Medicare’s drug costs, warning that it would “jeopardize access to medicines for seniors and patients with disabilities living with devastating conditions such as cancer, rheumatoid arthritis and other autoimmune diseases.” Trump’s proposal severely alters the Medicare Part B program by reducing physician reimbursement and inserting middlemen between patients and their physicians,” charges Ubl.

Adds, Frederick Isasi, executive director of Families USA, in his statement: “The data is clear. The way we currently pay providers and pharmaceutical companies for drugs administered in doctors’ offices and hospitals creates perverse financial incentives for providers to select extraordinarily expensive drugs that may not be best for their patients. “

“Medicare Part B is the perfect example of misaligned incentives, and the proposed rule, if implemented, could pilot significant new ways to pay for drugs that align incentives so that patients get the highest value care, they have the best outcomes possible, and costs come down, says Isasi.

Like many, Isasi hopes that Trump’s proposal of using the power of the federal government to reduce Medicare drug costs is “not just election year posturing” but truly reflects a policy shift to using federal negotiating power to get unstainable prescription drug prices under control.

Next year, after the dust settles after the mid-term elections, Congress must work together to hammer out a comprehensive legislative strategy to lower pharmaceutical drug costs and to provide health care to all Americans. Listen to the polls.

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