Published: Sat, May 12, 2018
World | By Camille Rivera

President Trump promises cheaper prescription drugs

President Trump promises cheaper prescription drugs

President Donald Trump and his health secretary are laying out new proposals created to reduce drug prices, including a requirement that drugmakers disclose the cost of their medicines in television advertisements. But most people anticipate something far less radical and instead expect any policy solutions to focus on resolving the problem of two prices: narrowing the spread between a high list price and the secret, rebated price.

That idea has always been supported by Democrats but is a non-starter for drugmakers and most Republicans in Congress.

Trump told the crowd that Obamacare is "failed experiment" then added "but wait till you see the plans we have coming out, literally, over the next four weeks, we have great health care plans coming out". In a speech, the president announced measures to increase competition and pricing transparency as ways to drive down costs, which have been spiraling.

In other words, pharmaceutical companies don't need to charge more in the U.S. to offset research costs for drugs that they sell elsewhere; they do so because they can. "They're not really thinking about the price to the system with those proposals". That's more than any other high-income nation in the world.

- A potential requirement for drugmakers to disclose the cost of their medicines in television advertisements.

For the more ambitious proposals, including reforming the rebating system, the plan said HHS would seek public comment and some may require Congressional approval.

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The approach could also help people not on Medicare. Americans are seeking relief from ever-rising prescription costs.

Raising Drug Prices in Other Countries Won't Help Here: "There's not a sensible health economist alive, or any economist, that will tell you that higher prices overseas will lead to lower prices here", Andrea Harris, senior vice president of health care at Height Capital Markets in Washington, told Bloomberg. Shares of the Nasdaq Biotechnology Index (Nasdaq:NBI) rose about 2.7 percent by day's end, while the shares of the SPDR S&P Pharmaceuticals ETF rose by about the same percentage. "Trump chose the incremental over the disruptive". CMS has said that giving rebates directly to consumers could make premiums go up for everyone, and also increase the total federal spending on Medicare Part D, by about $42 billion.

Some of the actions the department plans are expected to have near-immediate force, while others will take more work.

Trump made the remarks at the White House Rose Garden in a speech to introduce what he called "the most sweeping action in history" to lower drug prices. But as president he has shied away from major changes and has staffed his administration with appointees who have deep ties to the industry.

Trump was joined by several members of his cabinet, including Secretary Alex Azar, Secretary Steven Mnuchin, Secretary Wilbur Ross, Ambassador Robert Lighthizer, and Commissioner Scott Gottlieb.

Drugmakers argue that list prices do not reflect actual cost after discounts and rebates. This also gives manufactures the incentive to raise prices and gives providers the incentive to select more expensive medicines.

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"We are getting tough on the drug makers that exploit our patent laws to choke out competition", Trump said. "I don't want to overpromise that somehow by Monday there's going to be a radical change, but there's a deep commitment to structural change". Last year was a record-breaking year for new drug approvals from the FDA. And older drugs for common ailments like diabetes and asthma routinely see price hikes around 10 percent annually.

By the numbers, the average person in the USA pays about $1,000 a year for prescription drugs.

As Quartz noted in the past, one reason the U.S. can't get low drug prices is because it lacks the bargaining power of a cohesive public health system, unlike in countries with socialized medicine. He said that there would also be a request for information on ideas to lower drug prices.

But experts are skeptical the US can pressure foreign governments to pay more for drugs.

But it disagrees with the rebate policy.

During his presidential campaign, Trump called for the government to use its clout to negotiate Medicare drug prices, but senior administration officials said he would not call for that change - which is stridently opposed by drug companies.

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The drug industry's top lobbying arm, Pharmaceutical Research and Manufacturers of America, spent almost $26 million to sway federal decision makers a year ago, according to records tallied by Center for Responsive Politics.

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