White House to Address Drug Pricing & Put “American Patients First”

President Trump’s highly anticipated speech Friday on drug pricing unveiled a number of White House priorities in an effort to reduce prescription drug costs. The plan, American Patients First, is aimed at increasing competition, lowering out-of-pocket costs, easing negotiation and creating incentives for lower prices. Calling this “the most sweeping action in history to lower the price of prescription drugs for the American people,” the administration laid out proposals that could be acted upon immediately, as well as a few other ideas still under consideration and currently being reviewed.

As noted by Bloomberg Quint: “The blueprint omitted two policies that [the president] previously backed and that the industry feared most: Having the government directly negotiate prices and allowing the importation of prescription drugs from overseas.” Three key takeaways from the speech include:

  1. Taking on the “Tangled Web” of Industry Players: PBMs in the Spotlight

President Trump called out a number of players involved in a “broken system,” including pharmaceutical companies, insurers, distributors and pharmacy-benefit managers (PBMs). While he pointed out the amount of money the pharmaceutical industry spends on lobbying, PBMs – often referred to as the “middlemen” in the system –  took the hardest hit. President Trump stated his intention to eliminate PBMs, calling out “dishonest double-dealing” at the expense of consumers.

Following up the president’s speech, Health and Human Services Secretary Alex Azar noted the agency is looking into requiring pharmaceutical companies to disclose the cost of prescription drugs in advertisements as well, one of the more significant potential changes highlighted. The plan will also work to eliminate the “gag clause,” which bars pharmacists from disclosing pricing information to consumers at the pharmacy counter.

  1. Campaign Promise vs. Reality: Silent on Medicare Negotiations

While on the campaign trail, then-candidate Trump proposed allowing Medicare to directly negotiate prices for prescription drugs. However, today’s plan sidesteps pricing negotiation and instead builds on elements included in the president’s FY19 budget proposal, including a five-part plan to restructure Medicare Part D. Under the proposal, prescription drug plans would be required to pass on discounts and rebates they receive from pharmaceutical companies in an effort to lower out-of-pocket costs for Medicare beneficiaries.

  1. Who Pays for Medical Innovation? Ending “Global Freeloading”

President Trump claimed foreign governments are extorting unreasonably low prices from U.S. drug makers, a claim based largely on a February report from the Council of Economic Advisors. The president directed U.S. Trade Representative Robert Lighthizer to make fixing how foreign countries set price controls a top priority with every trading partner. Azar also specifically mentioned foreign countries’ utilization of socialist price controls to get unfair drug prices.

Other notable elements highlighted in the blueprint include advancing biosimilars and generics to boost price competition – an effort already underway at Food and Drug Administration; streamlining and accelerating the approval process for over-the-counter drugs; calling on the U.S. Trade Representative to  prioritize efforts to address unfair intellectual property and market access policies in our trade agreements; and expanding outcome-based payments in Medicare and Medicaid, by relying more on value-based pricing as a means to lower drug prices.

A transcript of President Trump’s remarks is available here and a fact sheet on the plan is available here.

Courtney Gray Haupt is executive vice president & group head, Health, Washington, D.C.

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