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Trump Seeks To Base Medicare Drug Prices On Lower Overseas Rates

29 October 2018
Trump Seeks To Base Medicare Drug Prices On Lower Overseas Rates

Less than two weeks before the midterm elections, President Donald Trump on Thursday announced a plan to lower prices for some prescription drugs, saying it would stop unfair practices that force Americans to pay higher prices than people in other countries do for the same medications. The analysis found that Medicare pays almost twice as much as it would for the same or similar drugs in other countries.

Thursday, Trump proposed having Medicare base what it pays for some expensive drugs on the average prices in other industrialized countries, such as France and Germany, where prices are much lower.

"Finally seeing this system reformed, in fact, is one of the pharmaceutical industry's ultimate nightmares", said Health and Human Services Secretary Alex Azar, a former Eli Lilly executive, in a Friday speech. Same company, same box, same pill, made in the same location, and you will go to some countries and it will be 20 percent [of the cost of drugs in the United States] because of what we pay and in some cases, much less than that.

HHS today released a study of 27 drugs that are usually paid for by Medicare Part B that showed that on average the us pays 80 percent more than the average prices in other countries.

"Over time this would cause major shifts in drug development and commercialization priorities - for example, manufacturers are likely to under-invest in office-administered injectables, and emphasize self injectable or oral products preferentially", wrote Leerink's Geoffrey Porges in an October 25 note. The administration's authority to implement the rule exists under the authority of the Center for Medicare and Medicaid Innovation, which was created under the Affordable Care Act, explained Rachel Sachs, an associate professor of law at Washington University in St. Louis, in a phone interview.

Trump also signed sweeping legislation at the White House on Wednesday tackling the opioid crisis, although some experts say it is only a first step.

The Trump administration is focused on prices paid for drugs that are covered under a portion of the Medicare program known as Part B. Those are typically drugs that are given in an doctor's office and include drugs used in cancer treatment, as well as eye medications like Eylea and Lucentis, used to treat age-related macular degeneration. In the United Kingdom, for example, a drug company will go to the National Institute for Health and Care Excellence, or NICE, offering confidential discounts or rebates off of a drug's list price.

Drugmakers immediately pushed back, arguing the plan amounts to government price-setting.

Trump has long promised sweeping action to attack drug prices, and health care is high among voters' concerns ahead of the November 6 elections. "These proposals are to the detriment of American patients", PhRMA President and CEO Stephen J. Ubl said.

Nicholas Florko is a Washington correspondent for STAT, reporting on the the intersection of politics and health policy. "Nothing special, just the prices that other countries pay". But that's "quite literally the opposite of what is being proposed".

"The reality is he could very easily not take this on and do what other administrations have done and let the prices keep rising".

Democratic leaders on Capitol Hill were dismissive. Medicare pays directly for them under its "Part B" coverage for outpatient care.

The health insurance industry, at odds with drugmakers over prices, was pleased with the administration's action.

Trump has made lowering drug prices a central promise of his presidency. The administration expects to begin piloting that program in half of the country in late 2019 or early 2020. Officials said they're seeking input on how to select the areas of the country that will take part in the new pricing system.

HHS Secretary Alex Azar criticized a system in which other countries to pay significantly less for drugs than the US government.

Before that visit, the department released a report that finds US prices for the top drugs administered in doctor's offices are almost twice as high as in foreign countries.

The new plan will also fix a broken payment system, where doctors are reimbursed more if they prescribe a much more expensive drug, he said.

"The proposed Medicare Part B model would jeopardize access to medicines for seniors and patients with disabilities living with devastating conditions such as cancer, rheumatoid arthritis and other autoimmune diseases..."

The HHS study, for example, shows that the US spent about $1.7 billion in 2016 on Rituxan, a drug made by Biogen Inc. that treats non-Hodgkin's lymphoma. HHS says the plan would save Medicare $17.2 billion over five years.

"Reduce costs to the American taxpayers and Medicare beneficiaries who fund these programs". It could pay them a flat fee, instead of the current system of providing a percentage of the medication's cost.