During the 2016 presidential campaign, one candidate famously claimed that drug companies were “getting away with murder”—using armies of lobbyists to influence Congress and artificially inflating drug prices.
But a lot can change in two years. That candidate was Donald Trump, who aggravated fellow Republicans on the trail with his forceful and blunt criticism of the pharmaceutical industry. Taking a page from the Democrats, he embraced a plan to allow Medicare to negotiate directly with drug manufacturers, promising that such a scheme could save hundreds of millions of dollars and reduce drug prices. When he was asked why the plan, which has circulated around Capitol Hill for about 15 years, hadn’t yet passed Congress, Trump said without reservation that it was all drug companies’ fault.
The industry is now having the last laugh. In a speech Friday on drug pricing, President Trump completed his 180-degree turn on Candidate Trump’s promises. The White House’s new plan, as outlined, does seek to address high prescription-drug costs. “We will not rest until this job of unfair pricing is a total victory,” Trump said. But it doesn’t directly challenge the pharmaceutical industry and the direct role it plays in setting prices. Indeed, the new policy largely meets the goals of big pharma, signaling an ever-tightening bond between Trump and drug manufacturers.
One of the major pieces of the plan that Trump outlined Friday is an ongoing effort to change the federal government’s 340B Drug Pricing Program, which provides rebates to hospitals that treat a high share of Medicaid and uninsured patients. Those rebates are intended to lower the cost of care by forcing drug manufacturers to provide medications—especially high-cost drugs for chronic conditions—at cheaper prices to the neediest populations. But the $18 billion 340B program has been the setting for a war between drug manufacturers, who claim hospitals are simply pocketing the savings and not passing them on to patients, and the hospitals themselves. They claim drug manufacturers aren’t actually lowering prices, and instead are using the rebates as an excuse to increase their list prices.
In a policy document released Friday, the White House described its commitment to requiring that safety-net hospitals “use their 340B drug discounts to provide care to more low-income and vulnerable patients.” But an earlier move from the administration undercuts that commitment. Late last year, the Centers for Medicare and Medicaid Services slashed the 340B program to the tune of somewhere between $900 million to $1.65 billion, effectively siding with drug manufacturers who say the rebates aren’t worthwhile.
Perhaps the most impactful set of policies that Trump outlined—and that he actually has the power to pursue—involve what he calls “putting American patients first”: intervening in an escalating drug-price war and increasing research-and-development competition between domestic drug companies and international drug companies. International competition has long been a major focus of drug lobbying, as manufacturers in the United States claim they shoulder most of the burden of research, while price-setting in other countries means they don’t reap commensurate global profits. In response, Trump promised to release a comparison of global drug prices. He also pledged to change drug-patenting and Food and Drug Administration regulation to enhance domestic research and expand the ability of pharmaceutical companies to keep effective monopolies over their drugs.
Trump’s policy seems to fall pretty much in line with what Novartis and other pharmaceutical companies have lobbied for years to get. With health secretary and former Eli Lilly president Alex Azar on board to fill in the details, the president outlined a plan that validated longtime drug-industry critiques of Part D payments, rebates, and PBMs. The plan shifts more government money toward obscuring the list prices of manufacturers’ drugs, and takes a protectionist stance on American companies. President Trump calls his plan “American patients first,” but the interests of American pharmaceuticals may be taking priority.
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