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.

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

A 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 single-source 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