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Trump plans 'favored nations' drug prices order, reaches out to Democrats

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Trump plans 'favored nations' drug prices order, reaches out to Democrats

President Donald Trump said he planned to soon issue an executive order that would require drugmakers to offer the U.S. government the lowest prices paid by other developed nations for prescription medicines.

"We're working on a favored nations clause where we pay whatever lowest nation's price is," Trump told reporters on July 5 outside the White House.

He said he planned to issue the order "very shortly."

SNL ImagePresident Donald Trump
Source: Associated Press

"Why should other nations pay much less than us?" Trump said, adding that some countries' costs for their medicines are 70% lower than what the U.S. pays.

But when a Democratic senator at a hearing last year proposed testing the favored nations idea, Health and Human Services Secretary Alex Azar said it would not be feasible.

"I've actually looked a lot and thought a lot about this issue of best price, most favored nation status, where we would say, 'Give us the best price you give developed countries,'" Azar told Sen. Tim Kaine, D-Va., at the June 12, 2018, hearing of the Health, Education, Labor and Pensions Committee. "I don't think it would be effective, to be very honest."

Azar said such an approach would result in biopharmaceutical companies pulling out of the countries that are setting the reference price.

"That's why drugs are often not launched in certain countries like the U.K. or Germany, and those people just do not ever get those drugs," the HHS secretary said in June 2018.

But Azar has since reversed course on the matter.

The secretary and Trump are now "both firmly committed to pursuing any and every solution, including importation and most favored nation policies, that will deliver real results and keep American patients safe," an HHS spokesperson told S&P Global Market Intelligence in a statement.

The administration is already mulling over whether to issue a proposed rule to test whether using an international pricing index payment model could lower the costs of expensive injectable medicines covered under the Medicare Part B program for seniors and disabled Americans.

In a June 20 notice, the White House Office of Management and Budget acknowledged it was reviewing HHS' proposal, which the drug industry has staunchly opposed.

Sens. Bernie Sanders, I-Vt., and Rick Scott, R-Fla., have each proposed their own ideas for basing U.S. payments for medicines on the prices paid by other industrialized countries.

Drug prices up, again

In a July 1 op-ed in the New York Post, Azar and Joe Grogan, director of the Domestic Policy Council at the White House, insisted the administration's efforts would hold drugmakers accountable for their prices.

But on the same day, the makers of over 100 medicines boosted their prices.

Prices rose by an average of 10.5% for more than 3,400 prescription drugs in the first half of 2019, according to a new analysis from Rx Savings Solutions, which provides consultancy services to employers and health plans.

The prices of 40 medicines had increased by over 100%, the group said.

Trump reaches out to Democrats

Also on July 5, Trump said he would "love to have the Democrats come back and talk about infrastructure, talk about drug pricing" — a request that came after he had stormed out of a May 22 meeting with House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y. Trump had vowed to never work with his political rivals on those two issues until they stopped investigating him.

On July 7, Trump tweeted that "If Dems would work with us in a bipartisan fashion, we would get big results very fast" on cutting drug costs.

Pelosi has repeatedly said she remained optimistic about working with Trump and the White House on efforts to reduce U.S. drug prices.

Generics more costly under Part D

Meanwhile, Medicare Part D beneficiaries with complex diseases like multiple sclerosis are paying more in out-of-pocket costs at the pharmacy for generic medicines than patients in the program who use brand-name drugs, according to a new analysis published last week in the public policy journal Health Affairs.

But the authors of the report blamed the way the Medicare Part D program was set up for the higher generic costs, not the companies that make the drugs.

Under the Medicare Part D program's "doughnut hole" — the coverage gap where beneficiaries must pay 100% of the costs of their medicines — users of brand-name drugs get a manufacturer discount that is counted toward their out-of-pocket spending.

But there is no such discount available for users of small-molecule generics, meaning patients who take branded medicines can more quickly reach the Part D program's catastrophic coverage — the phase where beneficiaries are only responsible to pay 5% in out-of-pocket costs for their therapies.

SNL Image
Sens. Chuck Grassley and Ron Wyden
Source: Associated Press

The authors of the report suggested that policymakers modify the Part D benefit to ensure that patients who use generic medicines are not penalized for doing so.

Senators probe groups' ties to opioid makers

Also last week, the Republican and Democratic heads of the Senate Finance Committee, Chuck Grassley of Iowa and Ron Wyden of Oregon, respectively, launched an investigation into whether the financial ties between opioid manufacturers and nonprofit groups have influenced treatment and policy decisions.

"We believe that it is important to shed light on these financial relationships to ensure transparency and accountability in matters that affect federal healthcare programs and the patients that participate in them," the lawmakers wrote in letters to 10 tax-exempt groups.