More on Reimbursement

President Trump wants drug companies to post prices in ads

Strategies include increased competition and negotiation with incentives to lower list prices and out-of-pocket costs, HHS Sec. Alex Azar says.

Susan Morse, Managing Editor

Credit: C-SPANCredit: C-SPAN

President Donald Trump on Friday promised sweeping action to lower the price of prescription drugs.

Trump went after the middleman, without naming that entity, drug makers, insurers, pharmacy benefit managers, "everyone involved in the broken system."

"The middle man became very, very rich," Trump said. "They won't be so rich anymore.

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He also went after the drug lobby, which he said spent $280 million in a year. Health insurance companies and providers spent another $200 million to protect the status quo and keep prices artificially high, the president said.

But investors in the industry were reportedly relieved by the speech as offering "more rhetoric than reform," an analyst said, according to one Investor's Business Daily. In afternoon trading, biotech and pharmaceutical stocks traded up 2-3 percent and pharmacy retailers such as CVS and Amerisource Bergen jumped a respective 2 and 4.8 percent, the report said.

The Administration will direct the FDA will speed up approval process for over the counter medicines, so patients can get more drugs without a prescription.

The Department of Health and Human Services has over 50 actions in a blueprint that hits on four strategies to increase competition and negotiations, and give incentives to lower list prices and out-of-pocket costs, said HHS Secretary Alex Azar, a former executive for Eli Lilly.

These will be implemented through policy and regulatory changes, and action in Congress.

HHS is going after health insurers and pharmacy benefit managers that implement gag rules to pharmacies that prevent pharmacists from telling customers they could pay less for a drug if they pay cash instead of going through their insurance plan.

Azar said foreign countries are getting a free ride off of American innovation in being able to offer drugs for less money than Americans pay at home.

"In some cases, medicines that cost a few dollars in a foreign country, cost hundreds of dollars here," Trump said. "It's time to end the global freeloading once and for all."

The Administration wants to see the development of more generic drugs, which last year saved the FDA $8.8 billion by the development of an estimated 1,000 generics. HHS will go after pharmaceutical companies that try to stop generics from being developed by blocking access to their products and studies, Azar said.

Azar said he wants to bring private sector negotiation to Medicare Part D drug plans to lower the cost of drugs. In Part B plans administered by physicians, the Centers for Medicare and Medicaid Services pays the list price plus a markup. 

"They send us a bill, we write a check," Azar said.

This will change with the move into private Part D negotiations, he added, and current incentives keeping drug prices high will be changed.

"Everyone in the system is wetting their beak along the way," Azar said.

HHS will have the Food and Drug Administration direct drug makers to disclose their prices in television ads.

In the drug discount program, Azar said, drugs in a protected class to get a discount. The rule should be that only those drugs that haven't increased their list price for 18 months get to be in a protected class.

Pharmacy benefit managers are getting compensated by both drug makers and insurers. They should only be reimbursed by insurers to align interests for the lowest prices, Azar said.

Regulatory changes include changing rebates as a method in negotiating pharmacy prices.

Trump talked about reforming the drug discount program for safety net hospitals., he said, referring to greater oversight of the 340B program that helps disproportionate share hospitals serve low income patients.

340B Health the president's proposal to cut Medicare payments to 340B hospitals violates the Medicare and 340B statutes. It cuts $1.6 billion from the safety net and does nothing to reduce drug prices for seniors and the disabled. 

PBM Express Scripts said, "President Trump rightly recognizes drug companies charge way too much, and their prices need to come down. In particular we were pleased that the Administration recognized and endorsed policies that we have advocated for over the years, including increasing access to biosimilars, increasing the number of generic drugs available, and eliminating gag clauses and clawbacks -- anti-patient practices that we do not engage in."

America's Health Insurance Plans said, "Prescription drug prices are out of control, and these high prices are set and raised year after year by drug manufacturers. AHIP supports the goal of stopping big pharma from gaming the patent and regulatory systems to keep drug prices high and increasing the flexibility for insurance providers to negotiate lower drug prices.

But it disagrees with the rebate policy.

"Requiring drug rebates to be passed through to Medicare patients at the pharmacy counter would likely lead to higher drug prices from manufacturers, and would lead to higher premiums for seniors, as well as $40 billion in additional costs for hardworking taxpayers."

Twitter: @SusanJMorse
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