The Trump administration has outlined a number of policy changes it says will lower drug prices, but some experts are skeptical that the actions will accomplish that goal.
The White House's Council of Economic Advisers issued a 30-page report (PDF) Friday that offers a slew of policy updates on drug prices that aim to:
- Reduce current drug prices
- Provide incentives to pharmaceutical companies to lower the price of maintaining health through research and innovation
President Donald Trump said that drug pricing reform was a major goal for the administration this year during his State of the Union address.
"I have directed my administration to make fixing the injustice of high drug prices one of my top priorities for this year," Trump said. "And prices will come down substantially—watch."
One of the report's central proposals is for payers to share the savings from drug rebates more directly with patients, an issue that has been a major source of tension between the pharmaceutical industry and insurers. Payers argue that they take the savings from rebates and apply them across the board to reduce premiums, but patient copayments are determined by a drug's list price, not the price after insurer rebates.
The proposals also call for changes to Medicaid rules that the White House says push pharmaceutical companies to set higher prices, and it suggests moving Medicare Part B drug coverage for some expensive medications into Medicare Part D, which would eliminate incentives that the report says lead doctors to prescribe pricey drugs over low-cost alternatives.
The CEA also proposes making some generic drugs free for Medicare enrollees.
The CEA also takes aim at "free-riding" abroad, which is says increase drug prices here at home. Many developed countries have single payer health systems that set price controls on medication, which leads to higher costs in the U.S., where drugmakers can set their own prices. Pharma companies argue that the increased profits are necessary to pay for research to create new, innovative therapies.
The group estimates that Americans pay for 70% of patented drug profits that fund innovation.
"The U.S. biopharmaceutical industry is the engine of worldwide biopharmaceutical innovation and an important part of our economy," according to the report. "Preserving the industry and encouraging it to innovate while making drugs more available and affordable for all Americans is an attainable goal."
But skeptics say that these steps won't do much to accomplish the goal of reducing drug prices, especially as many of the proposals included in the CEA's report are championed by pharmaceutical companies.
"It's all part of the general effort to change the focus away from the true problem," Mark Hamelburg, senior vice president of federal programs for America's Health Insurance Plans, told The New York Times.
The changes to Medicare Part D would likely run counter to the stated goals and actually raise costs for seniors, the Pharmaceutical Care Management Association, the trade group for pharmacy benefit managers, said in a statement.
"It would raise premiums for all seniors, help only 10% who take certain drugs, and do nothing to improve things for low-income seniors, who already pay no cost sharing in Part D," the group said.
And others criticized the proposal for not going far enough. Peter Maybarduk, the access to medicines director for Public Citizen, a nonprofit group that lobbies against increasing corporate power, told The Wall Street Journal that "some of these [measures] might be progress," but that steps like allowing Medicare to negotiate drug prices directly with pharmaceutical companies would be more effective.
Trump himself advocated such a measure during his presidential campaign, but has since eased off on calling for it, as it's an unpopular proposal with Republicans.