Trump seeks to base Medicare drug prices on lower overseas rates

29 October, 2018, 10:58 | Author: Lillian Steele
  • Polls show voters are worries about healthcare costs

Health Secretary Alex Azar said President Trump's bid to tie what the US government pays for certain Medicare drugs to what other nations pay won't cripple innovation or access to vital treatments, even if the plan is one of Big Pharma's "ultimate nightmares". As part of a demonstration project covering half the country, Medicare would establish an "international pricing index" and use it as a benchmark in deciding how much to pay for drugs covered by Part B of Medicare.

The Department of Health and Human Services released a report on Thursday showing that the prices paid in the USA for drugs that are part of Part B are 1.8 times higher than in other countries like the UK, France and Canada. "The United States has a competitive marketplace that controls costs and provides patients with access to innovative medicines far earlier than in countries with price controls, and it's why we lead the world in drug discovery and development".

"Same company. Same box". Previous administrations have resisted the idea of restricting Americans' access to drugs or treatments, which is more common in other countries' national health care systems.

Many large pharmas have limited exposure to Part B, which encompasses drugs administered in doctor's offices or hospital outpatient clinics.

- Don't expect immediate rollbacks.

The announcement, which Trump teased at a Wisconsin rally late Wednesday - "very soon, drug prices will go plunging downward" - came as the President is working to mobilize his loyal Republican base ahead of the midterms by revisiting his 2016 promises to un-rig the United States economy. He made his announcement just ahead of the November 6 elections, with health care high among voters' concerns.

The new plan released on 25 October is based on an HHS study, Comparison of USA and International Prices for Top Medicare Part B Drugs by Total Expenditures [pdf].

The agency is also proposing creating a new group of middlemen to negotiate bulk purchase prices for this class of drugs, bill Medicare and then distribute the medications to doctors. Health care has been a major focus of Democrats in their campaigns, including high drug prices and warnings that Republicans will remove protections for people with pre-existing medical conditions. In his remarks Thursday, he combined that with a swipe at foreign trade practices, framing the Medicare proposal as a way to restore fairness for American healthcare consumers.

A recently-released government study said that Medicare paid 80 percent more than other advanced industrial countries for some of the most expensive prescription medicines, The Times reported.

Drug pricing expert Peter Bach of Memorial Sloan Kettering's Center for Health Policy and Outcomes called the plan "a pretty substantive proposal" but one that faces "serious political challenges". But that's "quite literally the opposite of what is being proposed". The new prices would be pegged to an "international pricing index" based on the average sales price in other countries with economies comparable to that of the United States.

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Democratic leaders on Capitol Hill were dismissive.

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

"The administration is imposing foreign price controls from countries with socialized health care systems that deny their citizens access and discourage innovation", PhRMA Chief Executive Stephen Ubl said in a statement.

HHS Secretary Alex Azar returned fire in a speech Friday, saying Medicare is paying too much because the drug industry wants it that way. "US prices were higher for most of the drugs included in the analysis, and USA prices were more likely to be the highest prices paid among the countries in our study".

Another concern: The federal government's negotiating power is more limited when it comes to Part B drugs because Medicare can not exclude medications.

The HHS said the plan would save American taxpayers and patients $17.2 billion and would cause total payment for the affected drugs to drop by 30 percent.

The move would cut costs for Medicare and save beneficiaries millions of dollars, according to the Times. Today, Medicare reimburses doctors and hospitals the average sales prices of the drugs, plus 6 percent to cover the cost of giving medications to patients. However, HHS officials said the plan is designed so it would not cut into doctors' reimbursements.

"Something has to change in how Medicare pays for physician-administered drugs", Azar said at the Brookings Institution think tank in Washington. "There is more coming".

Trump has harshly criticized the pharmaceutical industry, once asserting that the companies were "getting away with murder", a comment that sent pharmaceutical stocks tumbling.

The president in May also claimed drug companies would be announcing "massive" voluntary price cuts.

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