Here Is Trump's Blueprint For Lowering Drug Prices

With Trump set to unveil his vision for lowering drug prices as part of his "American Patients First" initiative, moments ago the department of Health and Human Services released a blueprint plan on drug prices.

While the full 44 page report is at the back here is the summary of how Trump hopes to lower drug prices:

  • Increased Competition
  • Better Negotiation
  • Incentives for Lower List Prices
  • Lowering Out-of-Pocket Costs

An quick skim of the plan, highlights the following section:

  • Considering fiduciary status for Pharmacy Benefit Managers (PBMs)

And some more details from the Plan:

Increased Competition: 

  • Immediate Actions
    • Steps to prevent manufacturer gaming of regulatory processes such as Risk Evaluation and Management Strategies (REMS)
    • Measures to promote innovation and competition for biologics
    • Developing proposals to stop Medicaid and Affordable Care Act programs from raising prices in the private market
  • Further Opportunities
    • Considering how to encourage sharing of samples needed for generic drug development
    • Additional efforts to promote the use of biosimilars

Better Negotiation

  • Immediate Actions
    • Experimenting with value-based purchasing in federal programs
    • Allowing more substitution in Medicare Part D to address price increases for singlesource generics
    • Reforming Medicare Part D to give plan sponsors significantly more power when negotiating with manufacturers
    • Sending a report to the President on whether lower prices on some Medicare Part B drugs could be negotiated for by Part D plans
    • Leveraging the Competitive Acquisition Program in Part B.
    • Working across the Administration to assess the problem of foreign free-riding
  • Further Opportunities
    • Considering further use of value-based purchasing in federal programs, including indication-based pricing and long-term financing
    • Removing government impediments to value-based purchasing by private payers
    • Requiring site neutrality in payment
    • Evaluating the accuracy and usefulness of current national drug spending data
    • Investigating tools to address foreign government threats of compulsory licensing or IP theft that may be harming innovation and development, driving up U.S. drug prices

Incentives for Lower List Prices

  • Immediate Actions
    • FDA evaluation of requiring manufacturers to include list prices in advertising
    • Updating Medicare’s drug-pricing dashboard to make price increases and generic competition more transparent
  • Further Opportunities
    • Measures to restrict the use of rebates, including revisiting the safe harbor under the Anti-Kickback statute for drug rebates
    • Additional reforms to the rebating system
    • Using incentives to discourage manufacturer price increases for drugs used in Part B and Part D
    • Considering fiduciary status for Pharmacy Benefit Managers (PBMs)
    • Reforms to the Medicaid Drug Rebate Program
    • Reforms to the 340B Drug Discount Program
    • Considering changes to HHS regulations regarding drug copay discount cards

Lowering Out-of-Pocket Costs

  • Immediate Actions
    • Prohibiting Part D contracts from preventing pharmacists’ telling patients when they could pay less out-of-pocket
    • by not using insurance
    • Improving the usefulness of the Part D Explanation of Benefits statement by including information about drug price increases and lower cost alternatives
  • Further Opportunities
    • More measures to inform Medicare Part B and D beneficiaries about lower-cost alternatives
    • Providing better annual, or more frequent, information on costs to Part D beneficiaries

Of course, if Trump is indeed serious in his crackdown on pharma and drug companies, then the record IRR pharma companies reap through lobbying is about to crash.

Keep an eye on lobby spend to determine if Trump's plan is just more fluff or has some hope of actually working.

Although judging by the market reaction, the plan does appear to have some bit:

  • BI NA HEALTHCARE SUPPLY CHAIN INDEX FALLS TO SESSION LOWS
  • CVS, EXPRESS SCRIPTS DIP TO SESSION LOWS ON PRICING BLUEPRINT
  • WALGREENS, CVS FALL TO SESSION LOWS AS TRUMP SPEAKS

And here are the prepared remarks by the US HHS Secretary, Alex M. Azar, who spoke alongside Trump today at the Rose Garden:

Thank you, Mr. President for that powerful call to action, and for your leadership on this issue.

You have made it clear how important it is to bring down healthcare costs for the American people and get better deals on drug pricing in particular. That’s why you’ve made history today, by laying out the most comprehensive plan of action for drug affordability of any president.

The problem of high prescription drug costs is something that’s been talked about in Washington for a long time. But that’s all it’s been: talk, talk, talk.

We are privileged to have a president finally taking action, by laying out a blueprint for solving these problems using private-sector competition and private sector negotiation.

We’re not going to propose cheap political gimmicks. The President’s blueprint is a sophisticated approach to reforming and improving our system.

Everyone at HHS is rolling up their sleeves to get to work on this.

Let me just give a couple examples: Think about all the time everybody spends watching drug company ads, and how much information companies are required to put in them. If we want to have a real market for drugs, why not have them disclose their prices in the ads, too?

Consumers would have much more balanced information, and companies would have a very different set of incentives for setting their prices.

We’re immediately going to look into having the FDA require this.

President Trump has called for tougher negotiation and better deals, so we’re going to deliver on that, too. Our blueprint brings the latest negotiation tools to our government programs and expands private-sector negotiation to parts of Medicare that have never had negotiation.

These are just some of the more than 50 actions HHS has planned or under consideration. This is not a one-and-done deal—it is a comprehensive process.

We are going to drive real change in this system, while continuing to lead the world in innovation.

So thank you again, Mr. President, for your vision and leadership. We’re eager to get to work.

With real competition and the right incentives, your blueprint is going to finally put American patients first.

Full plan below (pdf link):

Comments

evoila Fri, 05/11/2018 - 14:22 Permalink

Yet IHE is up still.  Odd.  Just like healthcare stocks was announced by Obama. Went up the day it was signed, and went up the day it was repealed.  Heads or Tails, they win. 

Escrava Isaura tmosley Fri, 05/11/2018 - 17:13 Permalink

Trump lowering prices on anything? This must be an Onion article.

Second, if the US government is prohibited of negotiating lower drug prices, will the private citizen? Are you serious? Or, are the Americans conservatives this naive?

Third, isn’t Make America Great Again involving high wages, better pay? Then, how would you reconcile in delivering lower prices? Doesn’t MAGA contradict lower prices?

 

The core of the problem: Casino Healthcare Privately Owned Cartel.

The U.S. healthcare system was never designed from whole cloth with a strategic vision or intent, but instead it has evolved through the decades with a host of legislative "patches" and temporary fixes. The reason for this is simple. When a casino is generating profits of this magnitude it's critical to keep the casino humming and almost impossible to close it. 

Americans have a right to be angry with how the U.S. healthcare system has been hijacked for revenue and profits. One analyst recently categorized it as "legalized extortion on a national scale." In the same way that Michael Lewis exposed the complexity of high-speed trading on Wall Street, Casino Healthcare will expose the U.S. healthcare system for what it really is - a giant casino of epic proportions where the risks are both personal and nothing less than the health of an entire nation.

 

https://www.amazon.com/Casino-Healthcare-Health-Americas-Biggest-ebook/dp/B01EVBQGM4

 

In reply to by tmosley

tr123 Escrava Isaura Fri, 05/11/2018 - 17:43 Permalink

MAGA was about reducing taxes and other de-facto involuntary costs so that middle-class Americans have more take-home pay and therefore a higher standard of living. Tax reform was super-lame, but abolishing the individual mandate means anybody who doesn't want health insurance has that much more $ in their pockets. Given how expensive this crap is, it's a pretty big deal. 

Healthcare is expensive b/c the Gov subsidizes everybody who realistically wouldn't be able to afford premium care. This creates an almost unlimited demand, but the # of doctors haven't kept up, instead there are many times more Administrators (i.e., people who must be paid but who don't actually cure illness). This has been a trend for decades, and part of the blame falls on the AMA for restricting the supply of new doctors, then another on the FDA for restricting the supply of new competing drugs. Prices would be more competitive without either of them.

In the end, it's a case study of excessive regulation and bureaucracy making an entire industry inoperable. The patients who don't earn get it for free and those who actually work cover the bill for both. You could say the poor are overall much better off than otherwise, but the big winners are the Healthcare Co's, and they'd rather keep it that way then overthrow the system that works so well for them.

In reply to by Escrava Isaura

Escrava Isaura tr123 Fri, 05/11/2018 - 19:21 Permalink

The flaw with your think is that America never had a real free market, actually, no nation does, but for some third world nation. Free market ‘capitalism’ is a dog eat dog world, meaning fierce competition in which people are willing to harm each other in order to succeed. Look at what Trump did to his employees and investors at his casino, hotels, and airline for profit, wealth. Healthcare is no different.

US is a combination of Christian Zionism/colonization (land) and state capitalism (wealth) from day one. And still to this day.

Free market free will are all illusions. There are no such things.

 

The second problem with your think is that, what kind of nation you want to live in. Do you want to live in a nation that will leave most of its citizens behind? How long do you think that nation will hold together?

Let me put this way, imagine running a family in which the main goal is to maximize personal gains at the expense of others on the family. How long do you think that family will last before that family self-destruct?

Capitalism in a small scale is ugly but it can survive. However, in a large scale, it will lead to self-destruction. Healthcare and/or debt are not the problems. Capitalism is.

Capitalism is the problem for several reasons. It’s authoritarian. Capitalism makes it difficult for the working class to make coalitions thus increasing inequalities. Capitalism is built on cost shifting. Remember the Cuyahoga River in Ohio, which was so polluted that it "caught fire" in 1969? What do you think will happen to all the enriched uranium? The pollution? The trash?

These will make the Cuyahoga River fire looking like a child’s play,

 

In reply to by tr123

tr123 Escrava Isaura Fri, 05/11/2018 - 20:14 Permalink

I agree that there is no such thing as a true Free Market anywhere in the world. Same as how every Communist state had a Black Market every "free market" has it's own intervening forces.

But you can't just run with that and discard the whole idea. To do so would be to forget that "profit" isn't evil and that it actually serves a purpose. This is by far your #1 flaw so I'm going to try and enlighten you in as respective a manner as you've probably seen in a while. 

If I open a restaurant and serve garbage food nobody would go there and I'd go out of business pretty quick. But if my restaurant kicks butt everybody will go there and I may become quite wealthy.

That's the purpose of profit - to allocate wealth based on what the people decide to spend their hard earned money on. It's inherently democratic because it is the people en masse who by spending their money determine who becomes wealthy and who does not. 

If Trump mistreats his workers it's because he's a cheap bastard. If you do not support cheap bastards, you can go to another competitor instead. With enough people like you, it would be profitable for somebody to open a business catering to those who only patron establishments that treat their employees very well. The possibility of earning a profit is what draws people to create new things that satisfy others.

That profit-seeking enterprises are fiercely competitive just shows how effective the system is at maximizing the productivity of man-kind. You no longer have to drum up a slave gang, you just have to tell each person they can keep what they produce and watch them try and outdo each other to best serve their peers. (thereby earning a profit) 

The only alternative to a system of free market enterprise is one where an authority dictates what other people can (even have to) do with their time/money. Profit is irrelevant to them, they do whatever they think is best and are only limited by what they can't get away with. There is nothing more Authoritarian than the opposite of a free market. That kind of Gov almost unilaterally determines who the winners are, not the people. In this kind of world it pays not to be talented, and not to work hard, but to be well connected with those in power. That's how you get ahead in countries that use State power to overrule the wishes of the market. And if you really want to be big, you can't be afraid to murder your political rivals. That's why only the most cunning psychopaths rise to the top in such a system where State power overrules market forces.

I want to live in a Nation that allows each member to be as successful as he/she can, not one where the Gov robs half of your earnings to give away to somebody who did 0 to help only so that they can then vote for these same people to keep robbing me.

 

 

In reply to by Escrava Isaura

mkkby tr123 Fri, 05/11/2018 - 22:05 Permalink

Price transparency.  This is NOT HARD.  Force health care providers to quote prices up front.  Force health care companies to treat every customer equally.  Anybody else who tried their tactics would go to jail.

If medicaid negotiates the lowest price, then every consumer should get those prices.  Not some 10x jacked up rate, just because you are small.

If India gets a pill for $1, Americans cannot be charged 100k.  They should by law also pay $1.

In reply to by tr123

Singelguy duo Sat, 05/12/2018 - 05:53 Permalink

The best way to achieve that is to overhaul the patent system in the USA. The level of patent abuse is insane. Big pharma uses all kinds of tactics to extend their patent protection on their brand name drugs. No patent should be issued unless it is an original and unique idea, not just a change in indication or dosage strength. 

In reply to by duo

MasterPo Oldguy05 Fri, 05/11/2018 - 15:10 Permalink

Yeah, Mexico is the answer for many. A prescription I use costs $328 for a thirty day supply in the US, plus the doctor's cut for writing the script.

Same drug, same manufacturer $6 in Mexico - plus it's a 60 day supply and double strength. Needless to say I take regular trips south.

[The whole drug cartel is a scam to rip us a new one. The only winning move is not to play...] 

In reply to by Oldguy05

HRH of Aquitaine 2.0 MasterPo Fri, 05/11/2018 - 16:26 Permalink

$200 savings! Nice!

The thing about buying pharmaceuticals in Mexico is the issue of provenance and quality control. It's your body so that choice is up to you. There are times to cut corners and be cheap and times when it is not such a good idea to be cheap, in my experience. Sometimes the price you pay, over time, for being cheap doesn't turn out to be cost effective in the end.

But I think an app that instantly saved you $2400 a year is a good thing. Plus you don't have the expense or hassle of traveling to Mexico. FFS I can't take a short vacay for a long weekend (three days) that is three hours away without it costing $500 (or more) by the time I get a basic hotel room, pay for gas, and buy food (basic meals, nothing fancy). So that app just put nearly $3K in your pocket.

In reply to by MasterPo

Jim in MN JimmyJones Fri, 05/11/2018 - 14:51 Permalink

Yes.  Some of us Deplorables have been pushing similar ideas for wider segments of the health care industry.  I helped write the proposal below along with some others.

Feel free to share.

A Competitive ‘Big Bang’ for U.S. Health Care Reform

The Bottom Line

The U.S. health care industry needs a transformational ‘big bang’ transition to competition.  President Trump should demand industry cooperation for the creation of a $100 billion fund, paid for up front by the industry.  This fund would be used to pay the profits for those elements of the industry that demonstrate significant efficiency gains over the following three years, by greatly increasing supplier choice and bidding at all key cost points.  The fund would also be used for immediate premium relief for all American households.  Catastrophic care and pharmaceutical negotiations would be handled in separate arrangements, leaving a huge new competitive health care sector for nearly all services.

The Problem

Health care is directly in the new Administration’s sights.  There is immense appetite for change.  Replacing the Affordable Care Act is proving an elusive quest for the establishment Republicans.  On the Democratic side, a mix of timid incremental fixes rests uneasily with an urge to socialize the entire health care sector.  If the next reforms fail, systemic collapse or a national single-payer scheme become by far the most likely outcomes.  Indeed, we may see both.

The Big Idea

Facing this extreme strategic risk, it is clear that the President has an opportunity to bring in the executives of the Nation’s health care insurers, major care providers, and pharmaceutical firms.  He can make, and expect to win, very tough demands and come to very big deals with these executives. 

Making a large proportion of this industry into a highly competitive free market has a huge potential to benefit the American public.  Cost savings, efficiency gains, better services, and more choices are all possible.  This can be done as it has been in financial services, energy markets, and other examples across numerous countries.  The ‘big bang’ of a planned leap from fully regulated to largely market-driven industry is really no longer just an option for health care in the U.S.  It is, simply, necessary.

One lesson based on experience in other industries is crucial for U.S. health care, due to the size, complexity, and highly varied nature of industry service delivery.  In cases where the exact nature of cost points and potential efficiency gains are opaque or otherwise hidden from policymakers, the use of very large incentives can force industry to find the efficiencies without excessive regulatory oversight. 

The Proposal

Now is the time for a fresh proposal—one based on the fundamentally American and bipartisan tenets of liberty, free markets, and the quest for innovation.  A proposal that blows by the status quo and the short-sighted strategies of the industry powers that be.  A proposal, most importantly, that can be implemented quickly, offer premium relief to Americans, and create a permanent shift in an industry that makes up 20 percent of the U.S. economy.

What the President should demand is the creation of a $100 billion fund, paid for up front by the industry.  One name for this could be the Joint Operations-Premium Yield (JOPY) fund.  This fund would be used to pay the profits for those elements of the industry that demonstrate significant efficiency gains over the following three years.  In other words, profitability would become conditional on meeting performance targets, rather than gaming the system.  But on the upside, the level of profits need not be limited or regulated beyond meeting the targets for increased competition.  Success would be both lucrative and unlimited, within the competitive market.

For the first time, corporate boardrooms would be seeking lean and efficient cost structures rather than padding and gold plating (to inflate or hide excess profits).  Insurance companies, hospitals, medical partnerships, and patients would all share a common goal, to meet needs at the lowest cost.   In practice, the key notion is to embed bidding and arbitrage throughout the system.  At least five competitive sources should be sought, or if necessary created, for as many cost points as possible. Foreign providers and procedures should be allowed to compete in open marketplaces.  Rewards, bonuses and other incentives should be developed at many levels to spur innovation and efficiency.

 In this manner, one three-year ‘big bang’ would be the genesis of a culture of competition and, one can hope, excellence in service delivery. 

Supporting Experience

Decades of work across dozens of countries and diverse economic sectors has shown that the key to well-functioning markets is to establish as much competitive bidding and price arbitrage as possible into the system.  One, two or even three potential suppliers of goods and services are nearly always insufficient.  Five to seven competing suppliers has been shown to be a very strong indicator that bidding and arbitrage will push prices down (competitive pricing), rather than up (oligopolistic pricing).  The raw truth is, there is no such thing as neutral price arbitrage.  It can only work for the consumer, and economic efficiency, or against them.  This is why identification of key cost points, and putting a high priority on developing depth in the supply pool, is of the utmost importance in any market-based reform plan.  Ensuring that bidding and arbitrage function as pervasively and successfully as possible is paramount.  And yet, it is not as simple as simply imagining that these competitive structures can operate literally everywhere.  All industries and national settings are unique (and in the U.S., some state and regions are large enough to have their own unique conditions).  Paraphrasing Einstein, “make every industry as competitive as possible—but no more.” 

Issues and Responses

Identifying true market failure and unique limits to competition is also needed.  Market-based reforms fail when they are pushed too far or ignore fundamental, empirical facts about the industry.  For the U.S. health care system there are two areas that should not be forced into a minimally regulated market. 

First, catastrophic care can be seen as the long end of the risk tail for health care costs.  It is unrealistic to expect a patient with immediate or chronic need for the most expensive medical services to obtain bids, and for suppliers to maintain such costly technologies while risking losing bids.  Catastrophic care should be provided by a consortium of specialized insurance and provider entities, which could be public or private.  In many ways this catastrophic care system could remain much like today’s arrangement, but with performance-based reimbursement and profitability reforms.  

Similarly, pharmaceutical negotiations could aim for more competitive outcomes in the long term, but in the current crisis simple and dramatic price reductions should be demanded.  The past five to ten years of consolidation and profiteering in medical drugs will have to tide these firms over; the American public simply has to see major and immediate relief in this area.

In reply to by JimmyJones

HillaryOdor nakedhedgehog Fri, 05/11/2018 - 15:41 Permalink

You can't use government to address monopolies when government created them in the first place.  The system is rotten because it is built on rotten foundations.  You can't legislate around that fact.  The system will never ever improve until people accept a vastly different paradigm.  The patent system and intellectual property in general are abominations and must be eliminated.  It is nothing less than the completely arbitrary imposition of state power over what should be free people.  This is not the path to prosperity.  All attempts at putting government band aids on the festering wounds of government regulations can only make things at best marginally better in the very short term, and without fail disastrously worse over time.  The state is not the answer, not ever.  We already have the answer.  But people don't want it.  So fuck 'em.

In reply to by nakedhedgehog

RedBaron616 JimmyJones Fri, 05/11/2018 - 23:24 Permalink

It is actually rather simple. Require the drug companies to sell drugs in America at the lowest prices they are charging any other First World country. That means if they are discounting significantly to socialist medicine countries like Canada, American consumers will get the same prices. Simple, yet effective. Of course, it will never happen. One of the biggest problems: Big Government is the 900 pound gorilla in healthcare now.

In reply to by JimmyJones

Oldguy05 Labworks Fri, 05/11/2018 - 14:52 Permalink

There are very few pills that actually heal you and if they do they are expensive to the tune of thousands a month.

Diet and natural methods seem to help much more. Don't tell anyone I said that. I'm an RN that passes A LOT of medications. I hate my job. Although I'll still save your life and do what I can to make it better...if you want me to.

In reply to by Labworks

lasvegaspersona Oldguy05 Fri, 05/11/2018 - 15:52 Permalink

I've been a physician nearly 50 years. Many problems are degenerative...things like cartilage that can't repair itself. You can replace it or treat symptoms. Inflamatory disorders have seen many new very effective and very expensive treatments.

Most of the money is spent on the problems related to our diets (my guess) and we do not have a consensus about how to manage them. My best guess is insulin resistance strategies like intermittent fasting may provide a way for individuals to take control. I find very few people will to suffer the discomfort of not eating what they want when they want it....so it may not work for the average man.

In reply to by Oldguy05

mkkby lasvegaspersona Fri, 05/11/2018 - 22:21 Permalink

They should at least be told they can fix their problem by eliminating carbs and exercising.  Then if they want to drink sugar water and have all those horrible illnesses that come with diabetes it's their choice.

My problem is you guys just put them on metformin/insulin without sufficient education.  It makes you a meds salesman at best and criminally negligent at worst.

In reply to by lasvegaspersona