This past Friday, President Trump introduced a plan his administration intends to follow to make drugs more affordable in the US. His administration is calling the plan the American Patients First plan and Trump claims it will address the unfair pricing of drugs, one of the key drivers in the astronomical costs of healthcare in the U.S. and a threat to future innovation and cures from our research teams.
He also stated that he will work to end what he calls “global freeloading,” which is about the lower price on medication that is paid in other countries despite how much more the United States invests in medical research.
What's driving this policy change?
High list prices for drugs
Seniors and government programs overpaying for drugs due to lack of the latest negotiation tools
High and rising out-of-pocket costs for consumers
Foreign governments free-riding off of American investment in innovation
What exactly is in the plan?
The details are a little vague. As we mentioned in our post following the reporter briefing last Thursday, the basic idea is that it will increase pharmaceutical competition and decrease out of pocket costs for patients by:
- Lifting rules that prevent government programs from getting better discounts (like Medicare).
- Pushing other developed countries with tighter price controls to pay more.
- Incentivize drug companies to lower list prices.
- Attempt to prevent monopolies among drug makers that take advantage of the system.
How does it plan to lower prescription costs?
The White House is collecting feedback from stakeholders as well as FDA, with hopes to bring more generic prescriptions and biosimilars to the market. The administration would like to encourage sharing samples of generics and further education on biosimilars, with the goal of more physicians promoting them. Another key ingredient will be putting a stop to the games played by larger pharmaceutical companies to prevent other manufactures from attaining patents for generic versions of drugs.
Additionally, Trump intends to strengthen Medicare’s influence in drug negotiations, which does make sense considering it has 60 million beneficiaries and is the single largest purchaser of prescription drugs in the country. There's also a possibility of the FDA requiring drug makers to disclose prices in their television ads, which would be a huge step for price transparency.
Medicare and Prescription Costs
The Trump administration is seeking to place an inflation-based limit on rising drug costs dispensed in clinics and hospitals. The blueprint calls for a report about having insurers who manage Medicare Part D plans to also manage negotiations for specific costly Part B drugs. Currently, the federal government has minimal power to negotiate costs for Part B drugs.
The White House also wants to reduce rules regarding how many different drugs in categories of medicine must be offered. Building on some parts included in the president’s budget proposed for 2019, the plan proposes to cap spending in Medicare Part B and move Part B coverage into Part D to enable better negotiation.
Democrats have been pushing to negotiate directly with pharmaceutical companies through Medicare (which is currently prohibited by law), but Trump announced that they would not be pursuing that route. Instead, American Patients First will call to restructure Medicare Part D to allow sponsors to negotiate for lower prices.
What people are saying
For the most part, industry and consumer groups like the AARP support the administration’s efforts to lower prescription costs, and our team at Take Command Health thinks this could definitely be a step in the right direction in terms of boosting cost transparency and affordability in the market for individuals and families.
What happens next?
It's hard to say what's going to happen next or when it will happen, although the President has promised it will be soon. The document lacks a lot of necessary details to make that call, and some of the pieces will require Congressional support or further reports and analysis from agencies like the FDA, for example.
Take Command Health is here to keep you updated on the many changes going on in Washington that could affect your wallet and healthcare spending. We're committed to price transparency and policy change that makes healthcare more affordable for individuals and families.