May 20, 2019

Drug Lobby Compares Trump Drug Price Plan to ‘Socialized’ System

28 October 2018, 02:18 | Silvia Roy

The administration is planning a Thursday speech to discuss drug pricing proposals

Donald Trump speaking

The administration is proposing new regulations that would allow it to lower the overall prices of these drugs, by including in its calculation of average sales price the prices paid in countries around the world with similarly advanced economies.

The administration's new proposal would gradually decrease reimbursement for physician-administered drugs over five years until the USA pays 126 percent of what a selection of other nations pay. He says Americans are now going to pay the prices other countries pay.

The proposed International Pricing Index (IPI) payment would use private-sector vendors to procure, distribute, and bill Medicare for certain physician-administered drugs.

"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 administration is imposing price controls from countries with socialized health care systems that deny their citizens access and discourage innovation", PhRMA President Stephen Ubl wrote.

"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", said Senator Chuck Schumer of NY, the Democratic leader, The Times reported. He made his announcement just ahead of the November 6 elections, with health care high among voters' concerns. House Minority Leader Nancy Pelosi of California said if Trump wants to save seniors money he should seek congressional approval for Medicare to negotiate prices for its main prescription drug program, "Part D".

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Administration actions have yet to show major impact on the cost of prescription drugs.

"Finally seeing this system reformed, in fact, is one of the pharmaceutical industry's ultimate nightmares", said Health and Human Services Secretary Alex Azar, a former Eli Lilly executive, in a Friday speech.

In advance of his speech, HHS released a report that found US prices for the top drugs administered in doctors' offices are almost twice as high as in foreign countries. On average, HHS says, Medicare pays 180 percent of what other wealthy countries pay for the most costly physician-administered drugs. Prices in other countries are lower because governments directly negotiate with manufacturers. Azar said more plans were being developed to beat back the high cost of prescription drugs. "This happens because the government pays whatever price the drug companies set without any negotiation whatsoever". "These proposals are to the detriment of American patients".

To address the concern and bring Medicare Part B spending down, HHS proposed to test an alternative payment for certain drugs that had ASPs higher than the global price. On Thursday, the president announced a plan to bring down drug costs for Medicare.

President Donald Trump says will he take aim at "global freeloading" with his plan, which would run essentially as a pilot program within the Medicare Part B program.

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The lobbying groups for USA drugmakers aren't happy about President Donald Trump's plan to borrow from Europe's system of paying for some high-cost drugs. Beneficiaries would save through lower cost-sharing.

"This is not the end of the road, the end of the journey", he said.

Any push to dramatically lower prices here could meet resistance not only from drugmakers but from doctors, another powerful lobby. "There is more coming". However, HHS officials said the plan is designed so it would not cut into doctors' reimbursements. But it's largely been business as usual for drugmakers even as Trump has predicted "massive" voluntary price cuts. The analysis found that Medicare pays almost twice as much as it would for the same or similar drugs in other countries.

Analysts expect the proposal will spur a flood of comments from industry and other corners of the healthcare system, potentially delaying the administration's proposed timeline for implementation.

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