With midterm elections less than two weeks away, President Donald Trump is pushing a plan to lower prices for some prescription drugs, and Friday it put his administration on a collision course with the powerful pharmaceutical industry. Under the new model, Medicare would pay fees to doctors that are more closely aligned with what other countries pay.
In the speech, delivered Thursday afternoon at the Department of Health and Human Services, Trump excoriated other countries for what he called "freeloading" off of American biopharmaceutical innovation by forcing American patients to pay more for drugs than their overseas counterparts.
"Same company. Same box".
Many large pharmas have limited exposure to Part B, which encompasses drugs administered in doctor's offices or hospital outpatient clinics.
The speech was a a continuation of an effort set in motion in May, when the Trump administration laid out a 44-page drug-pricing blueprint, calling out middlemen in the pharmaceutical industry and "freeloading" by other countries that pay less than the United States for prescription drugs.
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This International Pricing Index model, which would be phased in over five years and take effect in half the nation, would save $17.2 billion for patients and taxpayers, the agency said.
Also, Trump's Justice Department is seeking to invalidate the health reform law's provisions governing pre-existing conditions as part of lawsuit being brought by 20 Republican states.
Trump has made lowering drug prices a central promise of his presidency. Instead, private vendors would negotiate with drug companies on their behalf and then bill the federal government.
Five months ago, Trump unveiled a blueprint to address prohibitive drug prices, and his administration has been feverishly rolling out ideas ranging from posting drug prices on television ads to changing the rebates that flow between drugmakers and industry middlemen.
"We have serious concerns with any changes to Medicare Part B that threaten patient access to lifesaving medicines, undermine physician care quality or discourage continued medical progress", Holly Campbell, a spokeswoman for the Pharmaceutical Research and Manufacturers of America, a trade association known as "PhRMA".
U.S. President Donald Trump, taking aim at "global freeloading", said on Thursday his administration would seek to lower prescription drug prices by basing what the government's Medicare program pays for some medications on the lower prices paid in 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".
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"Americans pay more so that other countries can pay less", he added. 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 U.S. patients.
Democratic leaders on Capitol Hill were dismissive. "Medicare could achieve significant savings if prices in the USA were similar to those of other large market-based economies", the report concluded.
"The world reaps the benefits of American genius and innovation, while American citizens, and especially our great seniors who are hit the hardest pick up the tab", Trump said.
The health insurance industry, at odds with drugmakers over prices, was pleased with the administration's action.
Top administration officials pushed back on drugmakers' charge that the plan would import "socialized" price controls.
In advance of his speech, HHS released a report that found USA prices for the top drugs administered in doctors' offices are almost twice as high as in foreign countries.
The new plan will also fix a broken payment system, where doctors are reimbursed more if they prescribe a much more expensive drug, he said.
"Some of the proposals make sense to us but most of our companies have relatively limited exposure to Part B and a total projected savings of $17.2Bn over five years (if the plan is fully implemented) should not be overly concerning to investors, in our view", wrote Credit Suisse analyst Vamil Divan in an October 25 note, referring to drugmakers covered by the bank's research team.
The move would cut costs for Medicare and save beneficiaries millions of dollars, according to the Times. Azar said politics would have nothing to do with it.
Trump's remarks were the first as president at HHS and come at a time when health care is playing a defining role in the campaign as Democrats slam Republicans over whether they support protecting access to health care for people with preexisting conditions.
Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder". "It really changes business as usual for a lot of institutions that make money off of high prices of drugs".
Azar released his analysis, which noted there was "no clear pattern as to which countries were consistently paying lower prices". The number of increases slowed somewhat and they were not quite as steep as in past years, the AP found. The plan was issued as an advanced notice of proposed rule making and stakeholders will have 60 days to provide comment.