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Trump administration plans hard run at prescription drug costs

17 May 2018

"But if industry isn't willing to work with us to lower prices, President Trump and his administration will keep turning up the pressure - until the system finally puts American patients first". He proposed an end so-called "gag clauses" on pharmacists.

This speech follows up on a major campaign promise by Trump to lower the prices of prescription drugs-a goal shared even by Democratic candidates including Hillary Clinton and Bernie Sanders. In reality, it is entirely in line with the financial interests of the drug companies and health insurers and will do virtually nothing to stop their profit-gouging.

"Consumers would have much more balanced information and companies would have a very different set of incentives for setting their prices", Azar said.

Once the speech concluded, stocks rallied.

Because Trump went easy on pharma, shares of drugmakers spiked after the speech. The stock prices for the country's two largest PBMS, Express Scripts and CVS, rose 2 percent at the conclusion of the speech, indicating investors weren't particularly fearful of Trump's threats.

The focus on PBMs is a good news for Indian drug makers.

Mr. Trump also wants to repeal Obamacare's cap on penalties drug companies must pay when they raise prices faster than inflation, though it will require legislation from Congress.

Trump said his administration would take aim at the "middlemen" in the drug industry who became "very, very rich", an apparent reference to health insurers and pharmacy benefit managers (PBMs).

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Under Trump's CMS, the agency slashed $1.6 billion in payments to hospitals under the 340B drug discount program, which Republicans have attacked as growing beyond what Congress intended and research finding hospitals haven't used the discounts to help low-income patients. "We need to foster and nurture a new, competitive biosimilar drug market".

"PBMs have long encouraged manufacturers to offer payers alternative ways to reduce net costs". In the first three months of this year, the industry has already spent almost $10 million for lobbying.

The Part D program now spends about $30 billion a year on the protected drugs, which include antiretrovirals, immunosuppressants, antidepressants, antipsychotics, anticonvulsant agents and antineoplastics. "It makes sense that proposals we see coming out of the administration would be somewhat limited". Drug prices are often substantially lower outside of the United States. And he called for "fairness overseas", arguing that other countries "extort unreasonably low prices from USA drug-makers", thus driving up prices here. It would only further fill the coffers of the pharmaceutical industry.

India has been pursuing a policy of price controls of drugs and medical devices. I've been a drug company executive - I know the exhausted talking points: the idea that if one penny disappears from pharma profit margins, American innovation will grind to a halt.

The move includes an FDA evaluation of whether drug manufacturers should be required to list prices in their advertising, as well as longer-term efforts to change the imbalance between what U.S. consumers pay for drugs developed in the United States versus what foreigners pay in their own countries, where drug prices are often substantially lower.

In Trump's announcement speech, he focused on the mismatch of drug prices in the United States and overseas, pointing out that customers in other countries pay much less for certain medication than American patients. He said the proposed changes to Medicare Part D could undermine the programme's existing structure that has managed to hold down costs and provided seniors with access to comprehensive prescription drug coverage.

Azar cited Peter Orszag, director of the Office of Management and Budget under President Obama, who once wrote that negotiation alone - without the ability to exclude drugs - would have a "negligible effect on Medicare drug spending" and tweeted his agreement that "negotiating ability alone is largely feckless".

The report highlights a number of double-digit price hikes a year ago among the 20 best-selling drugs, including a 29.2 percent increase in the price of Lyrica (manufactured by Pfizer), an 18.9 percent increase in the price of Humira (AbbVie) and an 18.9 percent increase in the price of Enbrel (Amgen).

Trump administration plans hard run at prescription drug costs