Trump has decried "global freeloading" as a reason why the United States pays high drug prices, but the administration's plans to bring down costs actually piggybacks on what other countries have done to lower prices themselves.
"We are taking aim at the global freeloading that forces American consumers to subsidize lower prices in foreign countries through higher prices in our country", he said in speech at the Department of Health and Human Services. Trump gave a speech on Thursday at the Department of Health and Human Services in which he laid out his approach.
"The United States will finally begin to confront one of the most unfair practices. that drives up the cost of medicine in the United States", Trump said.
"Same company. Same box".
But consumers take note: The plan would not apply to medicines people buy at the pharmacy, just ones administered in a doctor's office, as are many cancer medications.
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.
- Don't expect immediate rollbacks.
Trump said the move takes aim at what he characterized as "global freeloading" on prescription drugs. 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 has long promised sweeping action to attack drug prices, both as president and when he was running for the White House.
Healthcare and high prescription drug prices have consistently polled as top voter concerns ahead of November 6 elections where Trump's Republicans are battling to maintain control of Congress.
The plan will affect about a third of the $30 billion spent each year by Medicare Part B, which covers medications administered at a doctor's office or in a hospital. This is not fair, the president said, adding that this happens because the government pays whatever price the drug companies set, without any negotiation whatsoever. "Each country is making its own decisions around pricing and reimbursement for a drug based on their own budgets and mechanisms and policies and so on", he said in a phone interview. "These proposals are to the detriment of American patients".
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He alleged that for decades, other countries have rigged the system so that American patients are charged much more, and in some cases, much, much more for the exact same drug.
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". "If we paid the prices other nations pay, we'd bring the $1 billion down to $187 million dollars a year".
Democratic leaders on Capitol Hill were dismissive.
"This is a huge policy change and one that has great potential to reduce the prices that taxpayers for these drugs and Medicare beneficiaries pay for these drugs", she said. "Seniors, who are hit the hardest, pick up the tab".
The main health insurance industry trade group, at odds with drugmakers over prices, applauded the administration's action.
Top administration officials pushed back on drugmakers' charge that the plan would import "socialized" price controls.
Trump's administration plans to set up an "international pricing index", in which some USA drug prices would be linked to what 16 other countries pay, ultimately to get to a lower price in line with what those countries are paying, Politico reports.
Interestingly while Trump is proposing to shift the Part B program to look more like worldwide systems, the president and many administration members have accused those same countries of leeching off the US. HHS Secretary Alex Azar said politics would have nothing to do with it.
This supports a recently released HHS report, which found USA drug prices were almost twice as high as those in foreign countries.
Shortly after Trump's speech, pharmaceutical industry lobby group PhRMA said it opposed the changes, which it said would limit access to drugs for cancer and chronic conditions like rheumatoid arthritis.
The 19-page HHS report looks specifically at drugs purchased and dispensed by doctors themselves, under Medicare's Part B program.