After consistently telling Americans that if elected, he would demand Medicare be given the power to negotiate drug prices, President Donald Trump has backed away from that promise — excluding it from his strategy to lower the costs of medicines.
Instead, Trump plans to take other measures in his American Patients First strategy to save Medicare beneficiaries money on their drugs, senior administration officials told reporters in previewing the president's May 11 speech.
Rather than letting Medicare negotiate directly with biopharmaceutical makers on prices, Trump wants to change government rules to help Part D prescription drug plans work out better deals with vendors, the officials said.
"We are not calling for Medicare negotiation in the way that Democrats have called for," an official said. "We clearly want to make important changes that will dramatically improve the way negotiation takes place inside the Medicare program."
They said Trump would provide more details about what steps he plans to take in his speech and in the blueprint he plans to unveil May 11.
"He will set forth the most comprehensive plan to tackle prescription drug affordability of any president," one official said. "It includes actions to encourage innovation, while also promoting better price competition and addressing foreign freeloading."
He said Trump's blueprint would lay out steps to increase competition, support better negotiation, create incentives to lower list prices and reduce patients' out-of-pocket costs.
The officials hinted that Trump plans to target pharmacy benefit managers, or PBMs — often called middlemen — which negotiate rebates on behalf of insurance plans, including Medicare, with drug companies.
During recent speeches, U.S. Food and Drug Administration Commissioner Scott Gottlieb and Centers for Medicare and Medicaid Services Administrator Seema Verma confirmed as much.
Gottlieb suggested that Trump's strategy may involve re-examining the federal anti-kickback laws that provide safe harbor over the drug rebate deals that drug companies strike with PBMs and insurers.
"Every time a price goes up, manufacturers and middlemen get more money, but patients have to pay more," the administration official told reporters during the May 10 briefing.
Earlier in the day, U.S. Department of Health and Human Services Secretary Alex Azar told senators on Capitol Hill that "every incentive in the system is for higher list prices."
The administration officials said Trump plans to take actions to stop foreign nations from "freeloading" off U.S. taxpayers and investors, who largely fund the research and development for the world's innovative medicines.
Other countries use socialized healthcare with price controls to command unfairly low prices from U.S. drugmakers, placing the burden of financing drug development largely on Americans, they said.
The officials declined to describe what actions Trump has in mind to counter those foreign price controls, but said there were "things the U.S. government can do to help address that problem."
But at a May 10 afternoon news conference convened by Democrats, Rep. Lloyd Doggett of Texas argued that "raising prices for consumers abroad will not mean lower prices in America."
Trump's blueprint is based largely on the proposals he outlined in his fiscal 2019 budget request released in February, the administration officials told reporters, though they said it would build further on those measures.
Among those budget proposals are five actions aimed at tweaking Medicare: allow greater flexibility in benefit design to encourage better price negotiation; offer free generics to low-income seniors; require Part D plans to share a minimum portion of drug rebates with patients; discourage plans from accelerating beneficiaries into the catastrophic phase of the benefit with costly brand-name drugs; and protect seniors from catastrophic costs through new out-of-pocket maximums while ensuring plans have the incentives to limit excessive costs.
When implemented together, those actions "would save seniors tens of billions of dollars," an official told reporters.
In his budget plan, Trump proposed giving the FDA greater authority to ensure that generic-drug makers awarded 180 days of market exclusivity for being the first to file applications do not "unreasonably and indefinitely" use that incentive to block other generics from entering the marketplace beyond that protection period.
The White House officials noted the FDA has already been making strides that would lower Americans' drug costs, like speeding more generic medicines to the market — approving the most ever in 2017, though many of those applications were in the works before Gottlieb took the helm last year.
They said those 2017 entrants into the generics marketplace helped save Americans an estimated $8.8 billion.
The FDA has also launched a new program to educate doctors about lower-cost versions of biologic therapies, known as biosimilars, they noted.
The FDA chief, Gottlieb, has also vowed to take action to prevent brand-name drugmakers from gaming the system to impede generic competition.
Targeting hospital discount program
The officials noted that the Centers for Medicare and Medicaid Services has also taken actions intended to lower costs for seniors by cutting the payment rate for certain Medicare Part B medicines purchased by hospitals through the 340B drug discount program. It was created by Congress in 1992 to provide certain safety-net facilities serving indigent populations access to low prices on biopharmaceuticals.
The administration decreased the payments from the average wholesale price, or ASP, plus 6% to ASP minus 22.5%. The action is estimated to save seniors $320 million per year, the officials said.
In his budget request, Trump has also proposed reforms that would ensure hospitals paid under Medicare Part B that provide more than 1% of their patient costs in charity care could retain a discount under the 340B program.
At the Democrats news conference, the lawmakers said they wanted to see actions from Trump, not just more rhetoric — noting he has repeatedly said biopharmaceutical makers were "getting away with murder," but taken little action to hold the manufacturers accountable.
Instead, "he has given them a get out of jail free card," Sen. Ron Wyden, D-Ore., said.
Wyden noted that Trump's lawyer, Michael Cohen, has even personally profited from drugmakers — collecting $1.2 million from Novartis AG under a deal to provide insight into the administration, though the company said it essentially got nothing from the agreement.
On the campaign trail, Trump talked the talk,"but so far, he has 'failed to walk the walk,'" Senate Minority Leader Chuck Schumer, D-N.Y., told reporters.
Schumer said he expected Trump to simply "give a speech, give some promises and then give into the drug lobby."
Maryland lawmaker Elijah Cummings noted that he and fellow House Democrat Peter Welch of Vermont met with Trump in March 2017 to discuss their legislation, which calls for Medicare to negotiate directly with drugmakers for lower prices for the Part D program.
At that time, Trump expressed support, Cummings said. But since then, "it's been radio silence," the congressman said.