U.S. President Donald Trump said on Thursday his administration is seeking to lower prescription drug prices by determining the price the government's Medicare program pays for some medications based on the lower prices paid in other countries.
"We are taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country", Trump said during a speech at the Department of Health and Human Services. The payment formula would be based partly on the drug's ASP in the US and partly on the average price charged in other economically similar countries, which in most cases are lower than in the U.S.
Earlier this month, he signed bills ending the so-called gag-order on pharmacists, which prevent them from discussing cheaper options with customers.
Trump's remarks were the first as president at HHS and come at a time when health care is playing a defining role in midterm campaigns, with Democrats slamming Republicans over whether they support protecting access to health care for people with preexisting conditions. "Not all drugs would be included in this test. CMS would focus on drugs made by just one company (which tend to be expensive) and biologic medicines, which make up a large share of Medicare Part B spending", Politico reported.
The announcement came hours after the Trump administration released a report Thursday morning highlighting the steep spending by the U.S. government on prescription drugs.
The new payment model will affect just drugs purchased and dispensed by doctors themselves under Medicare's Part B program - not medicines purchased at pharmacies.
The proposed changes are related to the Medicare Part B program that pays for medications that patients receive in hospitals or in doctor's offices. "I don't think so", the secretary said of drug makers.
HHS based its IPI model on an analysis comparing Medicare spending for Part B physician-administered drugs to the prices of those drugs in 16 other developed economies-Austria, Belgium, Canada, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Japan, Portugal, Slovakia, Spain, Sweden, and the U.K. According to HHS, the USA spent 1.8 times more for the drugs than the 16 countries studied. Drug spending within Medicare Part B reached $22 billion in 2015, and drug costs have increased by an average of 8.6 percent annually since 2007.
Trump's administration plans to set up an "international pricing index", in which some U.S. drug prices would be linked to what 16 other countries pay, ultimately to get to a lower price in line with what those countries are paying, Politico reports.
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"The reality is he could very easily not take this on and do what other administrations have done and let the prices keep rising".
Trump said that with this new policy, the U.S. will finally begin to confront one of the most unfair practices that drives up the cost of medicine in the United States. In the five-year experiment, carried out through CMS's innovation center, prices will be gradually and increasingly pegged to the new worldwide index instead of average USA sales price. "Same pill. Made in the exact same location, and you would go to some countries and it would be 20 percent of the cost of what we pay", said Trump, who predicted the plan will save Americans billions. "President Trump asked us to fix this problem and here's how we plan to do it". Medicare pays directly for them under its "Part B" coverage for outpatient care.
With this knowledge, the Centers for Medicare and Medicaid Services designed a pilot project that leverages an "International Pricing Index" to help lower Part B drug prices. Drugs sold at the pharmacy are covered under Medicare Part D.
"It's hard to take the Trump administration and Republicans seriously about reducing health care costs for seniors two weeks before the election", Senate Minority Leader Chuck Schumer said in a statement about the Medicare pricing plan.
Trump kicked off his drug costs initiative last May from the White House Rose Garden, where he announced a 44-page blueprint containing some significant ideas that could threaten industries along the drug supply chain. On Thursday, the president announced a plan to bring down drug costs for Medicare. In a March Kaiser Family Foundation poll, eight in 10 respondents said drug costs are unreasonable and 92 percent said passing legislation to bring down the cost of prescription drugs should be a top or important priority.
While Medicare is barred from explicitly negotiating prices with drug companies, Trump's proposed changes are all created to use the collective power of the growing Medicare market to force drugmakers to bring down their prices or lose access to a potentially lucrative market.
President Donald Trump's new pledge to crack down on "the global freeloading" in prescription drugs had a sense of déjà vu.
The administration said it did not plan to propose the rule until next spring, and would begin implementing it in 2020 over a five-year period.